https://www.arnoldporter.com/en/rss/perspectivesNews & Perspectives | Arnold & Porteren{B7C6C36A-0E0F-4E2B-861D-F43627D8B1D6}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/10/sarah-rosenberg-talks-beauty-dupes-and-brand-protection-in-the-business-of-fashionSarah Rosenberg, Arnold &amp; Porter Intellectual Property associate, was quoted in <em>The Business of Fashion</em> article, &ldquo;The Politics of Duping,&rdquo; which examines how beauty dupes have become a mainstream category and how the lines between inspiration, imitation, and counterfeiting have blurred.Fri, 09 Oct 2026 00:00:00 -0500<p>Sarah Rosenberg, Arnold &amp; Porter Intellectual Property associate, was quoted in <em>The Business of Fashion</em> article, "The Politics of Duping," which examines how beauty dupes have become a mainstream category and how the lines between inspiration, imitation, and counterfeiting have blurred.</p> <p>The article explains that as brand loyalty weakens, dupe brands have more freedom to imitate, making it harder to distinguish trends, dupes, and counterfeits. Sarah addressed the legal challenge this creates. "It becomes really difficult to draw a line and say: 'This amount of copying is acceptable, this amount of copying isn't,'" she said. She added that beauty dupes differ from fashion dupes because they begin by replicating a product's function rather than its form.</p> <p><a href="https://www.businessoffashion.com/articles/beauty/the-politics-of-duping/">Read the full article</a> (subscription required).</p>{2A078D11-6053-4595-B017-DAB4482B42E2}https://www.arnoldporter.com/en/perspectives/publications/2026/10/antitrust-agency-insights-developments-at-the-us-antitrust-enforcement-agencies-third-quarter-2026Matthew Tabashttps://www.arnoldporter.com/en/people/t/tabas-matthewmatthew.tabas@arnoldporter.comAndre Geverolahttps://www.arnoldporter.com/en/people/g/geverola-andreandre.geverola@arnoldporter.comYasmine L. Harikhttps://www.arnoldporter.com/en/people/h/harik-yasmineyasmine.harik@arnoldporter.comZoe Staumhttps://www.arnoldporter.com/en/people/s/staum-zoe-rachaelzoe.staum@arnoldporter.comExplore key antitrust enforcement developments from the third quarter of 2026, including notable FTC and DOJ investigations, merger reviews, litigation, settlements, and evolving regulatory priorities shaping the U.S. competition landscape.Fri, 09 Oct 2026 00:00:00 -0500<h2>Letter From the Editors<span style="font-size: 13px;">&nbsp;</span></h2> <h3>Lessons From a Failing Firm: FTC Approves Struggling Fairfield Medical Center Sale </h3> <p>A recent FTC action provides a reminder that even when a transaction involves a target in financial duress, parties need to be mindful of antitrust considerations. On September 1, 2026, Adena Health, a hospital system based in south central and southern Ohio, announced its acquisition of Fairfield Medical Center (FMC), a hospital system in southeastern Ohio, following the attempted acquisition of FMC by OhioHealth, a Columbus-based 16-hospital system. The FTC pushed back against the OhioHealth deal, scrutinizing the plan for two local competitors to create a combined hospital system even though FMC was in financial distress and potentially a &ldquo;failing firm.&rdquo;</p> <p>In a statement announcing the transaction between Adena Health and FMC, the FTC highlighted staff concerns with the OhioHealth deal and noted that &ldquo;FTC staff encouraged FMC to seek alternative potential buyers through a robust sales process.&rdquo; Bureau of Competition Director Daniel Guarnera called the standard for asserting the failing firm justification &ldquo;demanding&rdquo; and highlighted the agency&rsquo;s willingness to ask firms &ldquo;to investigate whether there is a better buyer&rdquo; if the FTC finds it has &ldquo;not searched broadly for a buyer[.]&rdquo;[[N: Press Release, Fed. Trade Comm'n, <a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/09/statement-regarding-fairfield-medical-centers-sale-adena-health" target="_blank">Statement Regarding Fairfield Medical Center's Sale to Adena Health</a> (Sept. 2, 2026).]]</p> <h3>Fairfield Medical Center Abandoned Its First Sale&nbsp;</h3> <p>In fall 2024, FMC sought a buyer and found interest from local competitor OhioHealth.[[N: See Fairfield Med. Ctr., <a rel="noopener noreferrer" href="https://www.fmchealth.org/fairfield-medical-center-explores-partnership/" target="_blank">Fairfield Medical Center Explores Partnership</a> (last visited Aug. 28, 2026); <a rel="noopener noreferrer" href="https://www.bizjournals.com/columbus/news/2025/11/20/ohiohealth-seeks-acquire-fairfield-medical.html" target="_blank">OhioHealth Seeks to Acquire Lancaster's Fairfield Medical Center as 17th Hospital</a>, Columbus Bus. First (Nov. 20, 2025).]] After OhioHealth and FMC announced their planned combination in November 2025, the FTC opened an investigation into the deal.[[N: On February 20, 2026, the DOJ also filed a lawsuit against OhioHealth, alleging that OhioxHealth used its size and dominance in the market to force insurers into anticompetitive contracts and push out lower-cost health plans from other hospitals. Press Release, <a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-sues-ohiohealth-anticompetitive-healthcare-contracts-increase-costs-ohio" target="_blank">U.S. Dep't of Just., Justice Department Sues OhioHealth for Anticompetitive Healthcare Contracts That Increase Costs for Ohio Patients</a> (Feb. 20, 2026). See also, Complaint, <em><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1428276/dl" target="_blank">United States v. OhioHealth Corp.</a></em>, No. [Dkt. No. 1] (S.D. Ohio filed Feb. 20, 2026).]] The FTC expressed concern about OhioHealth&rsquo;s purchase of FMC and its potential to increase costs, reduce the quality of care in Ohio, and raise OhioHealth&rsquo;s share of inpatient hospital admissions in Fairfield County and surrounding areas.</p> <p>The agency also questioned the process FMC used to find potential buyers and the thoroughness of its search, looking &ldquo;closely at the <em>process</em> that a financially distressed hospital followed to identify potential buyers.&rdquo;[[N: <a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/ferguson-meador-adena-fmc-statement.pdf" target="_blank">Statement of Chairman Andrew N. Ferguson, Joined by Commissioner Mark R. Meador, Regarding Fairfield Medical Center's Sale to Adena Health</a>, Fed. Trade Comm'n (Sept. 2, 2026)]] The FTC asked FMC to search for alternative potential buyers, resulting in the abandonment of the OhioHealth transaction and further deteriorating financial situation with FMC reporting an operating loss of more than $37 million in 2025.[[N: Id.]]</p> <p>Pushed by the FTC to identify alternative buyers, FMC broadened its search, fielding offers from multiple potential buyers. Adena Health, which does not operate a hospital in Fairfield County or surrounding areas, succeeded.</p> <h3>Elements of the Failing Firm Defense</h3> <p>Courts have recognized the failing firm defense for potentially unlawful mergers as far back as <em>International Shoe Co. v. FTC</em> (1930). As the court later explained, the defense &ldquo;presupposes that the effect on competition and the &lsquo;loss to [the company&rsquo;s] stockholders and injury to the communities where its plants were operated&rsquo; will be less if a company continues to exist even as a party to a merger than if it disappears entirely from the market.&rdquo;[[N: <em>United States v. Gen. Dynamics Corp.</em>, 415 U.S. 486, 507 (1974) (quoting <em>Int'l Shoe Co. v. FTC</em>, 280 U.S. 291, 302 (1930)).]]</p> <p>The DOJ/FTC 2023 Merger Guidelines recognize the failing firm defense and note that the parties must satisfy three key elements.[[N: U.S. Dep't of Just. &amp; Fed. Trade Comm'n, Merger Guidelines &sect; 3.1 (Dec. 18, 2023) (2023 Merger Guidelines).]] First, the firm must show a grave probability of business failure. Declining sales or net losses are insufficient. The firm should have evidence of its inability to meet its financial obligations or that it will be unable in the near future. Second, the prospect of restructuring the company through bankruptcy is dim or nonexistent. It is beneficial to show efforts to resolve debt.</p> <p>The third element &mdash; the basis for the FTC&rsquo;s concerns with FMC&rsquo;s sale to OhioHealth &mdash; is that the buyer, where it is a direct competitor to the failing firm, should be the only available purchaser. In particular, the target is expected to make good faith efforts to solicit multiple buyers and consider alternatives to a potentially anticompetitive offer. That is, an offer that raises competitive concerns is only allowed, under the failing firm defense, if no other offers are available.</p> <p>Chairman Andrew N. Ferguson outlined best practices for firms when they &ldquo;shop&rdquo; for a buyer in a joint statement issued with Commissioner Mark R. Meador following Adena Health&rsquo;s acquisition of FMC.[[N: <a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/ferguson-meador-adena-fmc-statement.pdf" target="_blank">Statement of Chairman Andrew N. Ferguson, Joined by Commissioner Mark R. Meador, Regarding Fairfield Medical Center's Sale to Adena Health</a>, Fed. Trade Comm'n (Sept. 2, 2026).]] &ldquo;An otherwise anticompetitive acquisition is justifiable only if the distressed firm &mdash; here a hospital &mdash; can substantiate that its &lsquo;shop&rsquo; process engaged with other buyers that do not present similar competition concerns as the proposed buyer.&rdquo;[[N: Id.]] For example, the Department of Justice&rsquo;s Antitrust Division closed its investigation into the owner of the Chicago Tribune&rsquo;s potential acquisition of the Chicago Sun-Times in part because the newspaper launched a public, transparent sale process.[[N: Press Release, <a rel="noopener noreferrer" href="https://www.justice.gov/archives/opa/pr/department-justice-statement-closing-its-investigation-possible-acquisition-chicago-sun-times" target="_blank">U.S. Dep't of Just., Department of Justice Statement on the Closing of Its Investigation into the Possible Acquisition of Chicago Sun-Times by Owner of Chicago Tribune</a> (July 12, 2017).]] The chairman and commissioner noted that seeking the highest possible offer is a different objective from searching for a reasonable alternative offer above liquidation value. Premature focus on a single buyer also may be disqualifying. For example, when Scott &amp; White Healthcare sought to acquire King&rsquo;s Daughters, the only other independent provider of hospital services in Bell County, Texas, the FTC required Scott &amp; White to allow another hospital system the opportunity to conduct due diligence and potentially purchase King&rsquo;s Daughters on specific terms. When the alternative buyer chose not to acquire King&rsquo;s Daughters, the FTC closed its investigation because there was no viable alternative purchaser.[[N: Debbie Feinstein &amp; Alexis Gilman, <a rel="noopener noreferrer" href="Debbie Feinstein &amp; Alexis Gilman, Power Shopping for an Alternative Buyer, Fed. Trade Comm'n: Competition Matters (Mar. 31, 2015)." target="_blank">Power Shopping for an Alternative Buyer</a>, Fed. Trade Comm'n: Competition Matters (Mar. 31, 2015).]] The Commission has cautioned in the past that the financially challenged firm must do more than window shop the assets.[[N: Id.]]</p> <h3>Key Takeaways</h3> <p>Given the FTC&rsquo;s scrutiny of FMC&rsquo;s search for a buyer, firms struggling financially (and their potential acquirers) should be cognizant that the failing firm defense is narrowly applied. Therefore, parties should prepare for scrutiny of acquisitions of distressed competitors, especially those serving rural communities where consolidation may be a concern.</p> <p>Firms need to perform a &ldquo;thorough shop process&rdquo; by conducting a comprehensive search for a buyer. This includes considering the full landscape of buyers before committing to a competitor. A comprehensive search process may include evaluating offers from smaller industry players, avoiding premature focus on a single buyer, and weighing reasonable offers even if not the leading offer (i.e., offers above the liquidation value of the company). If the search process is scrutinized, the FTC likely will prioritize competition preserving offers over more lucrative anticompetitive offers.&nbsp;</p> <p>Regardless, firms should document the search by compiling evidence of their outreach to potential buyers and evaluations during the decision-making process. Interested buyers should be given equal access to diligence information and sufficient time to evaluate the purchase. The consequence of a seemingly inadequate process may be re-shopping for a suitable buyer.</p> <p>Failing firms also must substantiate an immediate or near-term inability to meet financial obligations and show efforts to resolve debt with creditors. The FTC has expressed skepticism of failing firms due to firms recovering after a proposed transaction is abandoned in response to agency competition concerns.[[N: Ian Conner, <a rel="noopener noreferrer" href="https://www.ftc.gov/enforcement/competition-matters/2020/05/failing-firms-miraculous-recoveries" target="_blank">On "Failing" Firms &mdash; and Miraculous Recoveries</a>, Fed. Trade Comm'n: Competition Matters (May 27, 2020).]] Recent examples of &ldquo;miraculous recoveries&rdquo; may make agencies more skeptical of the failing firm defense, and firms should be careful to not exaggerate predictions of imminent failure.&nbsp;</p> <h3>FTC/DOJ Staff Updates</h3> <h4>FCC Attorney Nominated for DOJ Antitrust Chief&nbsp;</h4> <p>On July 21, 2026, President Trump nominated the Federal Communications Commission&rsquo;s general counsel Adam Candeub to the role of Assistant Attorney General in charge of the DOJ&rsquo;s Antitrust Division. The position is currently vacant, with Acting Assistant Attorney General Omeed Assefi having left the position in June. Candeub previously served as Acting Assistant Secretary and Deputy Associate Attorney General at the DOJ during the first Trump administration.&nbsp;</p> <p>On September 24, 2026, Candeub&rsquo;s nomination advanced to the Senate floor.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.congress.gov/nomination/119th-congress/1201/1" target="_blank">Link to Nomination Update</a></li> </ul> <h4>DOJ&rsquo;s Dina Kallay Leaves Agency</h4> <p>In late September, Deputy Assistant Attorney General Dina Kallay left her role at the DOJ Antitrust Division. She has served in this role since April 2025. DAAG Kallay previously worked as counsel for intellectual property and international antitrust at the FTC from 2006 to 2013.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/archives/atr/staff-profile/deputy-assistant-attorney-general-dina-kallay" target="_blank">Link to Profile</a></li> </ul> <h3>FTC Cases and Proceedings</h3> <h4>FTC Settles Loyalty Rebate Lawsuit</h4> <p>On September 28, 2026, the FTC settled its 2022 case against Corteva, in which the FTC and 10 states accused the pesticide maker of blocking competition from generic rivals with its loyalty rebates to customers. Under the terms of the settlement, Corteva is required to eliminate its pesticides loyalty program. Specifically, for 10 years, Corteva is prohibited from conditioning payments or other benefits to a distributor on (i) a requirement that the customer purchase more than 50% of its needs of a particular active ingredient; (ii) a requirement that a customer purchase more than 50% of its requirements for a particular active ingredient to qualify for a discount on a different active ingredient or otherwise satisfy two or more share-based requirements to qualify for discounts on a single product; and (iii) a requirement that the customer meet targets in a subsequent year. Tiered volume-based discounts are permitted. In addition, Corteva is required to pay $35 million to settle the states&rsquo; monetary claims.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/09/ftc-states-win-protections-lower-pesticide-prices-american-farmers-antitrust-case-against-corteva" target="_blank">Link to Press Release</a>&nbsp;</li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/SyngentaCrop-JointMotionforStipulatedOrder.pdf" target="_blank">Link to Settlement&nbsp;</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/0149-2023-10-05-Lesser-Redacted-Amended-Complaint-%28PursuanttoSept28Order148%29.pdf" target="_blank">Link to Amended Complaint</a></li> </ul> <h4>FTC Settlement Prevents Gunmakers from Sharing Board Members</h4> <p>On September 16, 2026, the FTC accepted a proposed consent order that prevents Beretta Holding SA from putting any of its own executives on fellow gunmaker Ruger&rsquo;s board. The FTC was concerned about interlocking directorates in violation of Section 8 of the Clayton Act due to the competitive overlap resulting from a deal between the gunmakers that will increase Beretta&rsquo;s stake in the company from 9.95% to up to 25%.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/09/ftc-takes-action-prevent-anticompetitive-arrangement-beretta-ruger-deal" target="_blank">Link to Press Release</a>&nbsp;</li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/Beretta-Ruger-ACCO_0.pdf" target="_blank">Link to Consent Order</a></li> </ul> <h4>FTC Remarks on the Adena Health and FMC Merger</h4> <p>On September 2, 2026, the FTC announced the transaction between Adena Health and FMC, highlighting the Commission&rsquo;s role in encouraging FMC to &ldquo;seek alternative buyers through a robust sales process.&rdquo; Bureau of Competition Director Daniel Guarnera called the standard for asserting the failing firm justification &ldquo;demanding&rdquo; and highlighted the agency&rsquo;s willingness to ask firms &ldquo;to investigate whether there is a better buyer&rdquo; if the FTC finds it has &ldquo;not searched broadly for a buyer[.]&rdquo;</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/09/statement-regarding-fairfield-medical-centers-sale-adena-health" target="_blank">Link to Press Release</a></li> </ul> <h4>FTC Settles Challenge to Redfin, Zillow Deal</h4> <p>On August 24, 2026, the FTC settled its lawsuit against Redfin and Zillow with Redfin agreeing to reenter the listing service market. The FTC claimed that Zillow used a $100 million rental listings syndication deal to force Redfin to exit a market in which the two companies allegedly competed and compel Redfin&rsquo;s customers to do business with Zillow instead. The settlement requires Zillow and Redfin to unwind the deal and restore Redfin&rsquo;s online marketplace for multifamily rental properties. The parties must eliminate any terms barring Redfin from owning and independently operating a rental-advertising internet listing service and limiting Redfin&rsquo;s ability to display its own listings, remove the information-sharing obligations, and modify syndication payments to accommodate re-entry into the market. Redfin has six months to rebuild its services, including operating a working customer portal and billing system, hiring a general manager, salesforce, and support team, and advertising to customers or face escalating penalties and contempt.</p> <ul> <li><a href="/en/perspectives/advisories/2026/09/ftc-places-redfin-back-on-the-market-reverses-agreement-with-zillow">Link to Client Advisory</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/ZillowRedfin-StipFinalOrder.pdf" target="_blank">Link to Stipulated Order</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/ZillowGroup-Complaint.pdf" target="_blank">Link to Complaint</a></li> </ul> <h4>SDNY Sides With FTC on Challenge to Construction Adhesive Merger</h4> <p>On August 14, 2026, following a bench trial, a court in the Southern District of New York blocked the proposed $725 million acquisition of a fellow construction adhesive brand Liquid Nails from American Industrial Partners. The FTC filed its suit seeking a permanent injunction to block the deal directly in federal court, alleging that the proposed transaction would eliminate competition between Loctite and Liquid Nails, leading to higher prices, lower quality, and reduced innovation. The court found that the transaction was presumptively unlawful due to the combined company&rsquo;s high share of the market for construction adhesives in cartridge form sold in the retail channel in the United States.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/08/statement-ftc-win-blocking-loctite-liquid-nails-construction-adhesive-merger" target="_blank">Link to Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/Henkel-Findings-Redacted.pdf" target="_blank">Link to Order</a></li> </ul> <h4>FTC Commissioners Split on IonQ Acquisition of SkyWater Technology</h4> <p>On July 28, 2026, the Commission granted early termination of its review of quantum computing developer IonQ Inc.&rsquo;s proposed acquisition of SkyWater Technologies Inc., a quantum chip fabrication company. On July 31, 2026, Chairman Ferguson and Commissioner Meador issued separate statements announcing a split decision. Chairman Ferguson suggested a &ldquo;behavioral remedy&rdquo; to address &ldquo;the short-term risks [that] are potentially acute both to competition and to our national security&rdquo; and detailed non-discrimination rules, firewalls, and other considerations that the Commission chose not to adopt. Commissioner Meador stated that &ldquo;the evidence available is insufficient to demonstrate that the effect of the transaction may be to substantially lessen competition, and on the contrary suggests that the transaction would be procompetitive or competitively neutral in its effects.&rdquo; A split vote means no action could be taken on the transaction.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/ferguson-statement-ionq-skywater.pdf" target="_blank">Link to Ferguson&rsquo;s Statement</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/meador-ionq-skywater-statement.pdf" target="_blank">Link to Meador&rsquo;s Statement</a></li> </ul> <h4>FTC Settles With Edwards on Reporting Obligation Evasion</h4> <p>On July 13, 2026, Edwards Lifesciences and Singapore&rsquo;s Genesis Medtech agreed to pay a combined $12 million to settle claims from the FTC that Edwards evaded its merger reporting obligations when acquiring medical device maker JC Medical from Genesis in 2024. The Commission alleged the transaction was structured to avoid reporting requirements in order to clear the way for Edwards to pursue a separate deal for JC Medical&rsquo;s competitor, JenaValve Technology. The FTC successfully challenged the $945 million JenaValve deal last year.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/07/ftc-secures-12-million-penalties-pre-merger-reporting-act-violations" target="_blank">Link to Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/EdwardsGenesis-StipulationandOrder.pdf" target="_blank">Link to Order</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/EdwardsGenesis-Complaint.pdf" target="_blank">Link to Complaint</a></li> </ul> <h4>FTC Settles With John Deere Allowing Right to Repair</h4> <p>On July 8, 2026, the FTC settled its lawsuit against John Deere, which alleged the company limited access to a fully functioning software tool to only Deere&rsquo;s network of authorized dealers, which restricted the ability of independent repair shops and farmers to repair Deere equipment. The settlement requires John Deere to provide farmers and independent repair providers with the same equipment repair resources, including applicable software capabilities, that it currently provides to authorized Deere dealers.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/07/ftc-states-secure-settlement-deere-company-advancing-farmers-right-repair" target="_blank">Link to Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/deere-chairman-ferguson-statement.pdf" target="_blank">Link to Commission Statement</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/Deere-JointMotion-StipOrd.pdf" target="_blank">Link to Settlement</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/006020250219AmendedComplaint.pdf" target="_blank">Link to Amended Complaint</a></li> </ul> <h3>DOJ Cases and Proceedings</h3> <h4>DOJ Reaches Settlements With Pinnacle and Willow Bridge in RealPage Rent-Fixing Dispute</h4> <p>On September 4, 2026, the DOJ announced a proposed settlement of its claims against Pinnacle Property Management Services LLC, which was accused by the DOJ in North Carolina federal court of using property management software company RealPage Inc.&rsquo;s revenue management technology to allegedly share pricing and competitively sensitive data using algorithmic coordination. The parties filed a joint stipulation and proposed order to resolve the DOJ&rsquo;s claims.</p> <p>The proposed consent decree requires Pinnacle to refrain from (i) using algorithms that generate pricing recommendations using its competitors&rsquo; competitively sensitive data or certain anticompetitive features; (ii) sharing competitively sensitive information with competitors; and (iii) attending RealPage meetings regarding competing landlords. Pinnacle must also engage a court-appointed monitor if it uses any third-party pricing algorithm and cooperate with the DOJ&rsquo;s claims against other defendants.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-reaches-proposed-consent-decree-pinnacle-one-americas-largest-landlords" target="_blank">Link to Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1460381/dl?inline" target="_blank">Link to Settlement</a></li> </ul> <p>On July 6, 2026, the DOJ and Willow Bridge Property Company LLC, one of the largest landlords in the U.S., reached a settlement in the DOJ&rsquo;s ongoing enforcement action against the use of algorithmic pricing in rental markets. The DOJ alleged that six landlords, including Willow Bridge, shared competitively sensitive data and coordinated in a scheme to set rents using pricing algorithms trained on such data. The proposed settlement filed in the Middle District of North Carolina requires the landlord to refrain from (i) using any anticompetitive algorithm that generates pricing recommendations using its competitors&rsquo; competitively sensitive data or that incorporates certain anticompetitive features, (ii) sharing competitively sensitive information with competitors, and (iii) attending or participating in RealPage-hosted meetings of competing landlords. Willow Bridge must also engage a court-appointed monitor if it uses uncertified third-party pricing algorithms and cooperate with the agency against other defendants.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-reaches-proposed-settlement-willow-bridge-one-americas-largest-landlords" target="_blank">Link to Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1451186/dl?inline" target="_blank">Link to Settlement</a></li> </ul> <h4>DOJ Settles HSR Enforcement Action Against KKR</h4> <p>On August 26, 2026, the DOJ filed a proposed settlement requiring KKR &amp; Co. GP LLC to pay a civil penalty of $250 million to resolve allegations that KKR failed to comply with its obligations under the Hart-Scott-Rodino Act by purportedly hiding key documentation and entire transactions from merger notification. The United States&rsquo; complaint asserted KKR evaded antitrust scrutiny for at least 16 separate transactions by failing to comply with the HSR Act.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/kkr-agrees-pay-record-250m-penalty-serial-violations-federal-premerger-review-law" target="_blank">Link to Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1459326/dl?inline" target="_blank">Link to Settlement</a></li> </ul> <h4>DOJ Issues Closing Statement in Seismic/Highspot Merger</h4> <p>On August 19, 2026, the DOJ closed its review of a sales-tracking software merger between Seismic Software Inc. and Highspot Inc. The DOJ said it was satisfied by the likelihood of AI-enabled competition, in an announcement touting the use of &ldquo;targeted&rdquo; scrutiny to end the probe quickly.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/statement-department-justice-antitrust-division-closing-its-investigation-merger-seismic" target="_blank">Link to Statement</a></li> </ul> <h4>DOJ Reaches Guilty Plea in Bid Rigging Conspiracy</h4> <p>On August 13, 2026, Qual-Tran Products Company LLC entered a guilty plea in a bid rigging case brought by the DOJ. On July 23, 2026, the DOJ alleged that Qual-Tran and its co-conspirators engaged in a conspiracy to rig bids submitted to SEPTA, a regional public transportation authority in Philadelphia, PA. According to the DOJ, between 2016 and 2024 the co-conspirators allegedly coordinated their submission of bids to SEPTA&rsquo;s procurement system for transportation parts and other goods.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1462601/dl" target="_blank">Link to Plea Agreement</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1462606/dl" target="_blank">Link to Information</a></li> </ul> <h4>DOJ Settlement Approved for Hewlett Packard Enterprise&rsquo;s Acquisition of Juniper Networks</h4> <p>On August 12, 2026, a federal judge in the Northern District of California approved the DOJ&rsquo;s proposed settlement to end its challenge of Hewlett Packard Enterprise&rsquo;s $14 billion purchase of Juniper Networks. The court approved the settlement over the objections of state enforcers, who challenged the settlement following the resignation of two senior DOJ officials in opposition to the settlement. The settlement requires Hewlett Packard Enterprise to divest its Instant On business and continue to license Juniper software to independent competitors.&nbsp;</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-requires-divestitures-and-licensing-commitments-hpes-acquisition-juniper" target="_blank">Link to Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1406596/dl?inline" target="_blank">Link to Settlement</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/media/1387541/dl" target="_blank">Link to Complaint</a></li> </ul> <h4>Building Material Suppliers Merger Approved With Divestitures</h4> <p>On August 7, 2026, the DOJ and the Attorney General of Tennessee reached an agreement with CRH PLC, allowing the building material supplier to purchase Standard Construction for $133.9 million. The DOJ required CRH to sell two hot-mix asphalt plants in western Tennessee as a condition of its approval, resolving enforcer concerns that the transaction would have harmed competition, leading to higher prices, lower quality, and less favorable terms for hot-mix asphalt used by the Tennessee Department of Transportation.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-partners-tennessee-attorney-general-preserve-competition-asphalt-western" target="_blank">Link to Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1456746/dl?inline" target="_blank">Link to Settlement</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1456736/dl?inline" target="_blank">Link to Complaint</a></li> </ul> <h4>Defendant in Cattle Auction Bid-Rigging Conspiracy Pleads Guilty</h4> <p>On August 6, 2026, the manager of a bovine artificial insemination firm pleaded guilty to a bid-rigging conspiracy involving public cattle auctions in violation of Section 1 of the Sherman Act. The DOJ alleges that the conspiracy spanned approximately six years, where co-conspirators would coordinate which company would win the bids at auction. Bovine artificial insemination companies purchase cattle in order to produce, market, and sell bovine semen for a variety of uses. The DOJ investigation is ongoing.&nbsp;</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/bovine-artificial-insemination-manager-pleads-guilty-multi-year-bid-rigging-conspiracy" target="_blank">Link to Press Release</a></li> </ul> <h4>Aircraft Parts Manufacturer Abandons Deal After DOJ Threat</h4> <p>On July 13, 2026, Aircraft parts maker TransDigm abandoned its planned $960 million purchase of Stellant Systems, after the DOJ threatened to challenge the deal over concerns about competition for the supply and repair components used in military radar systems. The DOJ claimed that the U.S. Department of Defense would have had a single source for critical products following the proposed acquisition, which would increase supply-chain risks and remove the benefits of competition.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/transdigm-abandons-proposed-acquisition-stellant-systems-response-justice-departments" target="_blank">Link to Press Release</a></li> </ul> <h3>FTC Policy</h3> <h4>FTC Supports Department of Education Reforms to Accreditation&nbsp;</h4> <p>On September 21, 2026, the FTC&rsquo;s Office of Policy Planning and Bureau of Competition issued a comment supporting the U.S. Department of Education&rsquo;s plan to increase competition among accrediting agencies, which &ldquo;is likely to improve the quality, responsiveness, and effectiveness of accreditation.&rdquo; The FTC praised the Department of Education&rsquo;s proposed reforms to reduce regulatory barriers inhibiting entry of new accreditors and make it easier for education institutions to switch accreditors, and to prevent the adoption of &ldquo;excessive educational standards&rdquo; by limiting the influence of trade and professional associations over accrediting agencies.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/accreditation-nprm-comment-letter_0.pdf" target="_blank">Link to Comment</a></li> </ul> <h4>FTC Urges Fourth Circuit to Reject Amgen&rsquo;s Antitrust Shield</h4> <p>On August 17, 2026, the FTC filed an amicus brief &ldquo;in support of neither party&rdquo; in the Fourth Circuit in the <em>Carefirst of Maryland v. Amgen</em> case, rejecting Amgen&rsquo;s assertion that its commercial agreements acquiring the rights to patent applications should not be subject to antitrust scrutiny.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/CareFirst-AmgenFTCAmicusBrief_0.pdf" target="_blank">Link to Brief</a></li> </ul> <h4>FTC and DOJ Encourage State Attorneys General to Stop Illegal Conduct in Petroleum Markets</h4> <p>On July 3, 2026, the FTC and the DOJ sent a joint letter to State Attorneys General encouraging them to conduct investigations and bring enforcement actions against companies manipulating gas prices or colluding with competitors in petroleum markets. The agencies are monitoring the marketplace as gas prices increase.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-and-federal-trade-commission-issue-call-action-state-attorneys-general" target="_blank">Link to Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1450951/dl?inline" target="_blank">Link to Letter</a></li> </ul> <h4>FTC and DOJ Issue HSR Annual Report</h4> <p>On July 2, 2026, the FTC and the DOJ issued their HSR report for fiscal year 2025, summarizing notifications under the HSR Act and the agencies&rsquo; enforcement actions. Out of approximately 2,000 reported transactions, the agencies sought enforcement actions against 18 deals.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/fy_2025_hsr_annual_report_for_transmittal_to_congress.pdf" target="_blank">Link to Report</a></li> </ul> <h3>DOJ Policy</h3> <h4>DOJ Supports Dismissal of Michigan Energy Case</h4> <p>On June 29, 2026, the DOJ filed a Statement of Interest in a case brought by Michigan against energy companies for an alleged conspiracy to suppress renewable energy technologies to maintain supracompetitive prices for fossil fuels. The DOJ argued that Michigan lacked standing to bring the case under <em>Illinois Brick</em>. On September 22, 2026, the district court agreed that the state lacked standing and dismissed the suit. While the court found Michigan plausibly alleged an injury from energy charges, the state did not show that the conspiracy was the proximate cause of the alleged injury, citing <em>Illinois Brick</em>&rsquo;s rule against indirect purchasers suing for damages under antitrust law.&nbsp;</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1450261/dl?inline" target="_blank">Link to Statement of Interest</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-issues-statements-us-district-court-western-district-michigans-decision" target="_blank">Link to Press Release</a></li> </ul> <h4>DOJ Plans to Tighten Investigation Deadlines</h4> <p>On September 8, 2026, DOJ Associate Attorney General Stanley E. Woodward, Jr. circulated an internal memo instructing the Antitrust Division to end the practice of granting extensions during negotiations over civil investigative demands (CIDs). Associate Attorney General Woodward explained that extensions must be authorized in writing by himself or other senior officials. The memo tells staff attorneys that they must sue to enforce subpoenas where recipients fail to meet the original deadline, except in extraordinary circumstances.</p> <ul> <li><a href="/en/perspectives/media-mentions/2026/09/debbie-feinstein-unpacks-dojs-new-civil-subpoena-deadline-policy-in-bloomberg-law">Link to Article</a></li> </ul> <h4>DOJ Files Amicus Brief in Verax BioMedical Case Against the American Red Cross</h4> <p>On August 21, 2026, the DOJ argued that the U.S. Court of Appeals for the First Circuit should reverse the district court decision holding that the American Red Cross is not a &ldquo;person&rdquo; subject to antitrust liability under the Sherman Act. Verax BioMedical, a biotech company, accused the American Red Cross of limiting competition for blood platelet testing.&nbsp;</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1459956/dl?inline" target="_blank">Link to Brief</a></li> </ul> <h4>DOJ Files Amicus in Support of X&rsquo;s Claims of Advertiser Boycott</h4> <p>On August 14, 2026, the DOJ filed an amicus brief in the U.S. Court of Appeals for the Fifth Circuit supporting X Corp. in its appeal of its dismissed claims against Mars, CVS, Nestle, Lego, Tyson Foods and other advertisers for allegedly agreeing to boycott the social media platform. The DOJ argued that the federal judge prematurely evaluated the merits of the claim &ldquo;then reasoned backwards to hold that X did not suffer antitrust injury&rdquo; and &ldquo;unduly limited the scope of conduct that can constitute a group boycott.&rdquo;&nbsp;</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1458686/dl" target="_blank">Link to Brief</a></li> </ul> <h4>DOJ Revokes Business Letter Issued to Proxy Advisor in 1987</h4> <p>On August 5, 2026, the DOJ withdrew its Business Review Letter issued in 1987 to Institutional Shareholder Services (ISS), an international proxy advisory business. The letter established that the DOJ would not use antitrust law to prevent the creation of ISS for advice relating to the exercise of voting rights on issues of corporate governance. However, according to the DOJ, because of ISS&rsquo; expansion into corporate consulting services, the letters no longer reflects ISS&rsquo; current business practices or the agency&rsquo;s view of those practices.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-withdraws-business-review-letter-issued-proxy-advisory-firm" target="_blank">Link to Press Release</a></li> </ul> <h3>FTC Speeches and Statements</h3> <h4>FTC Chair Comments on AI and FTC Updates</h4> <p>On September 15, 2026, Federal Trade Commission Chair Andrew Ferguson spoke at the Georgetown University Law Center&rsquo;s annual global antitrust enforcement symposium. Ferguson expressed skepticism over AI companies seeking an antitrust exemption so that they can coordinate on AI limitations, calling it &ldquo; deeply suspicious[.]&rdquo; He said, &ldquo;Regulation plus antitrust exemption sure sounds like moat-digging. And I think the thing that has made the United States the AI leader is that the companies are hypercompetitive with each other, and that there isn&rsquo;t central planning and direction.&rdquo;&nbsp;</p> <p>Ferguson also reiterated his approach to avoid in-house antitrust cases in favor of suing in federal court. He added that the FTC is working on changes to its merger notification rule after a prior attempt at overhaul was challenged by the U.S. Chamber of Commerce.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.law360.com/articles/2525425/ftc-chair-wary-of-ai-s-dual-push-for-regs-antitrust-shield" target="_blank">Link to News Article</a></li> </ul> <h4>FTC Commissioner Meador Remarks on Authority Under Section 5 of the FTC Act</h4> <p>On September 14, 2026, FTC Commissioner Mark Meador spoke at the Bill Kovacic Antitrust Salon at George Washington University Law School and asserted the agency&rsquo;s authority to fight unfair methods of competition. &ldquo;Moving forward begins and centers on restoring Section 5&rsquo;s independent function,&rdquo; Meador said, &ldquo;The prohibition of unfair methods of competition was meant to develop through enforcement by applying Section 5 to evolving market practices and confronting difficult questions about where to draw the line[.]&rdquo;</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/2025-09-15-meador-kovacic-salon-remarks.pdf" target="_blank">Link to Meador&rsquo;s Remarks</a></li> </ul> <h4>FTC Chair Remarks on the Need for Prudence as Enforcers</h4> <p>On September 5, 2026, FTC Chair Andrew N. Ferguson spoke at the International Bar Association&rsquo;s 30th Annual Competition Conference in Florence, Italy. Chairman Ferguson remarked on &ldquo;what it means to exercise prudence as enforcers of competition law and apply those principles to a specific example [enforcers] confront all the time: vertical transactions.&rdquo; He emphasized the purpose behind competition law as a method promoting free, fair, and competitive markets. Ferguson referred to vertical mergers as a &ldquo;sticky wicket for antitrust enforcers&rdquo; with potential procompetitive and anticompetitive effects. He suggested that a &ldquo;settlement with appropriately structured behavioral remedies is sometimes the best approach to vertical-merger problems[.]&rdquo;</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/ferguson-iba-florence-remarks.pdf" target="_blank">Link to Ferguson&rsquo;s Remarks</a></li> </ul> <h3>DOJ Speeches and Statements</h3> <h4>DOJ DAAG Glad Remarks on AI and Coordination</h4> <p>On September 22, 2026, Acting Deputy Assistant Attorney General Daniel Glad delivered remarks at the Women&rsquo;s White Collar Defense Association Conference in Chicago. Glad warned that &ldquo;an AI governance process that covers privacy, cybersecurity, and other risks but never asks the antitrust question is not enough.&rdquo; Glad went on to advise companies who use AI tools that they must &ldquo;know what data go in, where the outputs go, and whether non-public competitor information is being pooled or fed back into pricing decision.&rdquo;</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/speech/deputy-assistant-attorney-general-daniel-glad-delivers-remarks-2026-womens-white-collar" target="_blank">Link to Glad&rsquo;s Remarks</a></li> </ul> <h4>DOJ Associate AG Says Political Appointees Play Key Role in Antitrust Enforcement</h4> <p>On September 17, 2026, during remarks at Fordham University&rsquo;s 53rd Annual Conference on International Antitrust Law and Policy, and Antitrust Economics Workshop, Associate Attorney General Stanley E. Woodward Jr., who oversees the Antitrust Division, said political appointees like himself serve a key law enforcement role. He defended the role political appointees play in enforcing antitrust laws, saying it would be &ldquo;blatantly unconstitutional&rdquo; if the DOJ&rsquo;s leadership merely deferred to unelected officials.</p> <p>Woodward also commented about industry coordination on AI-related safety issues, and observed that coordinating on cybersecurity or security matters does not appear anticompetitive. Woodward invited AI companies to contact the DOJ to engage in a dialogue about these issues.&nbsp;</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/speech/associate-attorney-general-stanley-e-woodward-jr-delivers-remarks-53rd-annual-conference" target="_blank">Link to Woodward&rsquo;s Remarks</a></li> </ul> <h4>DOJ to Implement Targeted Second Requests</h4> <p>On July 23, 2026, the DOJ announced that it will resume targeted second request investigations to expedite merger review and published a model timing agreement. Associate Attorney General Stanley E. Woodward Jr. stated that a &ldquo;more targeted process&rdquo; will &ldquo;eliminate bureaucratic burdens&rdquo; and &ldquo;allow for quicker and more efficient review of proposed transactions.&rdquo;&nbsp;</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-resumes-targeted-hsr-merger-review-process" target="_blank">Link to Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1453731/dl?inline" target="_blank">Link to Model Timing Agreement</a></li> </ul> <h4>Deputy AAG Dina Kallay Remarks on Innovation and IP</h4> <p>On July 8, 2026, Deputy Assistant Attorney General Dina Kallay spoke at the Hudson Institute Forum for Intellectual Property. Kallay remarked on how the exclusive rights granted through intellectual property law create incentives for innovation and facilitate procompetitive activity. Kallay also noted circumstances where owning patents does not establish market power. Intellectual property owners should be able, according to Kallay, to enforce those rights without raising from antitrust liability.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/speech/deputy-assistant-attorney-general-dina-kallay-delivers-remarks-hudson-institute-forum" target="_blank">Link to Kallay&rsquo;s Remarks</a>&nbsp;</li> </ul> <p><span style="font-size: small;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{2D839527-892F-4F29-9985-F85EE8EA5116}https://www.arnoldporter.com/en/perspectives/events/2026/10/afida-in-focus-navigating-usdas-proposed-rule-after-the-comment-periodMarisa N. Boccihttps://www.arnoldporter.com/en/people/b/bocci-marisa-nMarisa.Bocci@arnoldporter.comBurden H. Walkerhttps://www.arnoldporter.com/en/people/w/walker-burden-hburden.walker@arnoldporter.comClaire W. Dennishttps://www.arnoldporter.com/en/people/d/dennis-claireclaire.dennis@arnoldporter.comJeffrey C. Thomsonhttps://www.arnoldporter.com/en/people/t/thomson-jeffrey-cjeff.thomson@arnoldporter.comSince June 2026, the U.S. Department of Agriculture (USDA) has proposed a sweeping overhaul of the regulations implementing the Agricultural Foreign Investment Disclosure Act (AFIDA), including a significantly expanded definition of &ldquo;agricultural land,&rdquo; a broadened &ldquo;beneficial owner&rdquo; standard, a lowered threshold for who qualifies as a &ldquo;foreign person,&rdquo; and narrowed exemptions for leases and easements.Thu, 08 Oct 2026 00:00:00 -0500<p>Since June 2026, the U.S. Department of Agriculture (USDA) has proposed a sweeping overhaul of the regulations implementing the Agricultural Foreign Investment Disclosure Act (AFIDA), including a significantly expanded definition of &ldquo;agricultural land,&rdquo; a broadened &ldquo;beneficial owner&rdquo; standard, a lowered threshold for who qualifies as a &ldquo;foreign person,&rdquo; and narrowed exemptions for leases and easements. The public comment period on the proposed rule closed on August 10, 2026, drawing substantial attention from commercial real estate developers, energy and infrastructure companies, AgTech companies, and institutional investors.</p> <p>Please join us for a webinar examining what comes next. Arnold &amp; Porter attorneys with substantive knowledge of AFIDA and the proposed rule will be joined by colleagues who bring deep administrative law and Administrative Procedure Act (APA) rulemaking experience, drawing on the firm&rsquo;s broader Administrative Law &amp; Regulatory Litigation practice, which advises clients on all phases of the federal rulemaking process and has secured precedent-setting outcomes under the APA. Together, they will summarize the proposed rule, discuss key themes and hot topics raised during the comment period, review USDA&rsquo;s historical rulemaking practices under AFIDA, and place the proceeding in the broader context of APA rulemaking and administrative law.</p> <h2>Topics</h2> <ul> <li>An overview of USDA&rsquo;s proposed changes to the AFIDA regulatory framework</li> <li>Themes and hot-button issues raised in the public comments submitted on the proposed rule</li> <li>USDA&rsquo;s historical approach to AFIDA rulemaking and what it may signal for the path to a final rule</li> <li>Broader APA rulemaking and administrative law principles that inform how agencies build, and defend, a rulemaking record</li> <li>How those principles may shape USDA&rsquo;s next steps and any resulting litigation risk as it moves toward a final rule</li> </ul> <p>Discussion will be led by Burden Walker, Former Deputy Associate Attorney General, U.S. Department of Justice, and Senior Counselor to the U.S. Attorney General, and Claire Dennis, Former Associate Chief Counsel at the U.S. Food and Drug Administration.</p> <h2>Who Should Attend</h2> <p>This program is designed for existing and prospective clients that utilize foreign investment as part of their equity structure and that own or lease rural land in the United States, including for purposes unrelated to agricultural production, such as renewable energy, infrastructure, and path-of-growth real estate holdings.</p>{39BB10B2-68FA-4E9A-815D-CDAD5F0FFF48}https://www.arnoldporter.com/en/perspectives/advisories/2026/10/implementing-the-genius-act-the-federal-reserve-proposes-a-comprehensive-rulemakingEun Young Choihttps://www.arnoldporter.com/en/people/c/choi-eun-youngEunYoung.Choi@arnoldporter.comDavid F. Freeman, Jr.https://www.arnoldporter.com/en/people/f/freeman-david-fDavid.Freeman@arnoldporter.comAmber A. Hayhttps://www.arnoldporter.com/en/people/h/hay-amber-aamber.hay@arnoldporter.comAnthony Raglanihttps://www.arnoldporter.com/en/people/r/raglani-anthonyanthony.raglani@arnoldporter.comKevin M. Toomeyhttps://www.arnoldporter.com/en/people/t/toomey-kevin-mkevin.toomey@arnoldporter.comChristopher L. Allenhttps://www.arnoldporter.com/en/people/a/allen-christopher-lChristopher.Allen@arnoldporter.comAdrien K. Andersonhttps://www.arnoldporter.com/en/people/a/anderson-adrien-kadrien.anderson@arnoldporter.comJames Moeshttps://www.arnoldporter.com/en/people/m/moes-jamesjames.moes@arnoldporter.comOn September 24, 2026, the Board of Governors of the Federal Reserve System (Board) issued two companion notices of proposed rulemaking to implement its responsibilities under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act or Act).Thu, 08 Oct 2026 00:00:00 -0500<p>On September 24, 2026, the Board of Governors of the Federal Reserve System (Board) issued two companion notices of proposed rulemaking to implement its responsibilities under the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act or Act).[[N: 12 U.S.C. &sect; 5901 et seq; see Press Release, Board of Governors of the Federal Reserve System, <em><a rel="noopener noreferrer" href="https://www.federalreserve.gov/newsevents/pressreleases/bcreg20260924a.htm" target="_blank">Federal Reserve Board Requests Public Comment on Two Proposals Related to Establishing A Regulatory Framework for Board-Supervised Payment Stablecoin Issuers Under the GENIUS Act</a></em> (Sept. 24, 2026).]] One proposal would establish the procedures an insured state member bank must follow to obtain Board approval for a subsidiary to become a Board-supervised permitted payment stablecoin issuer (PPSI) (the Application Proposal).[[N: <em>Application Procedures for Board-Supervised Insured Depository Institutions Seeking Approval for a Subsidiary To Issue Payment Stablecoins</em>, 91 Fed. Reg. 61,346 (proposed Sept. 29, 2026) (to be codified at 12 C.F.R. pts. 247, 262) (the Application Proposal). The Application Proposal would implement section 5 of the GENIUS Act.]] The other would implement substantive reserves, capital, redemption, risk management, custody, and reporting requirements for PPSIs; establish safeguards for Board-supervised custodians; and clarify certain stablecoin activities of Board-regulated firms (the Framework Proposal) (together, the Proposals).[[N: <em>Implementing the Federal Reserve Board&rsquo;s Responsibilities Under the GENIUS Act</em>, 91 Fed. Reg. 61,580 (proposed Sept. 29, 2026) (to be codified at 12 C.F.R. pts. 208, 211, 217, 225, 247, 263) (the Framework Proposal). The Framework Proposal would implement, among other provisions, sections 4, 7, 10, and 16 of the GENIUS Act, and would amend existing Board rules governing state member banks and certain other Board regulated entities.]]</p> <p>Together, the Proposals complete the initial interagency rollout of the GENIUS Act&rsquo;s regulatory architecture. The Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), and the National Credit Union Administration (NCUA) each proposed their own implementing rules earlier in 2026, and the U.S. Department of the Treasury (Treasury) and Treasury&rsquo;s Financial Crimes Enforcement Network (FinCEN) have proposed rules addressing state-regime equivalence, foreign issuers, and illicit-finance compliance.[[N: FDIC, 90 Fed. Reg. 59409 (Dec. 19, 2025) and 91 Fed. Reg. 18534 (Apr. 10, 2026) (deposit-insurance amendments); NCUA, 91 Fed. Reg. 6531 (Feb. 12, 2026) and 91 Fed. Reg. 28956 (May 18, 2026); OCC, 91 Fed. Reg. 10202 (Mar. 2, 2026) and 91 Fed. Reg. 37840 (June 24, 2026); Treasury, 91 Fed. Reg. 16844 (Apr. 3, 2026) (state-regime equivalence) and its August 2026 issuance-and-offering NPRM; OFAC and FinCEN, 91 Fed. Reg. 18582 (Apr. 10, 2026); and a joint customer-identification-program rule issued by FinCEN, the OCC, the Board, the FDIC, and the NCUA, 91 Fed. Reg. 37234 (June 22, 2026).]] The GENIUS Act, which was signed into law on July 18, 2025, will take effect on the earlier of January 18, 2027, or 120 days after the issuance of final implementing regulations. To that end, we expect to see the issuance of final rules in the coming weeks; however, the ultimate timing of full implementation of each required rulemaking is not certain. For an overview of the GENIUS Act and agency rulemaking, please see Arnold &amp; Porter&rsquo;s series of Advisories on Implementing the GENIUS Act.</p> <h2>The Application Proposal</h2> <p>A person becomes a PPSI through one of three routes: (i) as a subsidiary of an insured depository&nbsp;institution approved by its primary federal payment stablecoin regulator; (ii) as a federally qualified issuer approved by the OCC; or (iii) as a State-qualified issuer approved by a state payment stablecoin regulator.[[N: 12 U.S.C. &sect; 5901(23). Where the PPSI is a subsidiary of an insured state member bank, the Board is the primary Federal payment stablecoin regulator. Id. &sect; 5901(1), (25),]] The Application Proposal addresses the first route &mdash; setting application requirements and procedures for a subsidiary of an insured depository institution approved by its primary federal payment stablecoin regulator.[[N: The Application Proposal would not apply to uninsured state member banks. An uninsured state member bank may instead apply to its home state payment stablecoin regulator in order to become a PPSI that is a state-qualified payment stablecoin issuer, see id. &sect; 5901(31), and would remain subject to requirements otherwise applicable to state member banks in addition to requirements applicable to the entity as a state-qualified payment stablecoin issuer.]]</p> <p>An applicant would file a letter through the appropriate Federal Reserve Bank addressing four statutory factors the Board must evaluate: (1) the proposed PPSI&rsquo;s financial condition and ability to meet Framework Proposal requirements (reserves, capital, AML/CFT, permissible activities, and technological capability to comply with lawful orders); (2) whether a disqualifying felon serves as an officer or director; (3) the competence, experience, and integrity of officers, directors, and principal shareholders, including their compliance record and ability to satisfy conditions imposed by their primary regulator; and (4) whether the PPSI&rsquo;s redemption policy satisfies statutory disclosure and timeliness standards.[[N: Application Proposal &sect; 247.30(d). Section 5(c) of the GENIUS Act sets out the four statutory factors the Board must consider when reviewing an application. 12 U.S.C. &sect; 5904(c).]] For purposes of the Application Proposal, &ldquo;applicant&rdquo; would mean an insured state member bank seeking approval for a subsidiary to issue payment stablecoin; however, for evaluating the four statutory factors, the Application Proposal would interpret &ldquo;applicant&rdquo; to also include the PPSI subsidiary itself.[[N: 91 Fed. Reg. 61349, 61349 n.35.]]</p> <p>With respect to prescribed content, applications would be required to contain, at a minimum:[[N: Application Proposal &sect; 247.30(b)(2).]]</p> <ul> <li><strong>A Business Plan</strong>&nbsp;including proposed products and services, affiliate transactions and control arrangements; governance structure; material third-party relationships (including parties with control over private keys or redemption authority); and compliance approach</li> <li><strong>Financial information</strong> including funding sources, projected reserve composition, reserve management plans, and three years of pro forma financial projections</li> <li><strong>Policies and procedures</strong> covering redemption, reserve maintenance, custody of customer assets, recordkeeping and reconciliation, and AML/CFT and sanctions compliance</li> <li><strong>Capital-Structure Documentation</strong> if the PPSI will not be wholly owned by the applicant</li> <li><strong>Certifications</strong> by (i) every officer and director that he or she has not been convicted of a felony involving insider trading, embezzlement, cybercrime, money laundering, terrorist financing, or financial fraud, and (ii) an authorized representative that the filing contains no material misrepresentation or omission[[N: These certifications are backstopped by potential criminal liability under 18 U.S.C. &sect; 1001.]]</li> <li><strong>Biographical reports, fingerprints, and background checks</strong> for principal shareholders (greater than or equal to 10% of a voting class) and the PPSI&rsquo;s top two decision-makers</li> </ul> <p>The Application Proposal would set forth a tailored approach to application contents.[[N: Application Proposal &sect;&sect; 247.30(b)(3)(ii), (b)(5).]] Applicants proposing to own 100% of the PPSI would generally not need to duplicate information already available to the Board as the bank&rsquo;s primary regulator. By contrast, applicants involving multiple owners, a consortium structure, or third-party control arrangements would face more extensive disclosure obligations, including capital-structure documentation and beneficial-ownership information for any shareholder holding more than 5% of any class of voting securities.</p> <p>Within 30 days of filing, the Board would be required to notify the applicant whether the application is substantially complete; if not, the Board would be required to specify the missing information.[[N: Application Proposal &sect; 247.30(c), (e).]] Once substantially complete, the Board would have 120 days to act.[[N: Failing to act within the 120-day window deems the application approved. 12 U.S.C. &sect; 5904(d)(1), (3).]] The Board may deny an application only on a finding that the applicant&rsquo;s activities (including those of the proposed PPSI) would be unsafe or unsound. Any denial would be required to be explained in writing with specific findings and actionable recommendations within 30 days of the denial.[[N: Application Proposal &sect; 247.30(f).]]</p> <p>If denied, an applicant may request a written or oral hearing to appeal a denial within 30 days of receiving it.[[N: Application Proposal &sect; 247.31.]] The Board would be required to notice the hearing within 30 days of the request and issue a final determination within 60 days of the hearing. The applicable standard would permit reversal where the applicant presents good-cause new facts or the Board otherwise determines that relief is warranted.</p> <h2>The Framework Proposal&nbsp;</h2> <p>The Framework Proposal prescribes proposed rules that would apply to Board supervised PPSIs and Board-supervised custodians, implements the GENIUS Act&rsquo;s tying prohibition for all PPSIs, and mandates rules applicable to state-qualified PPSIs.</p> <h3>Permissible and Prohibited Activities</h3> <p>Board-supervised PPSIs would be limited to core activities authorized by the Act including issuing, redeeming, and managing reserves for, and providing custody of, payment stablecoins.[[N: Framework Proposal &sect; 247.10.]] PPSIs also would be permitted to assess fees relating to the purchase or redemption of payment stablecoins, act as principal or agent in connection with core activities, and perform incidental activities that directly support the core activities. Specifically, Board-supervised PPSIs could, in connection with payment stablecoin activities and investments contemplated by the Act, (i) act as principal or agent with respect to any payment stablecoin; (ii) pay fees to facilitate customer transactions (e.g., network or &ldquo;gas&rdquo; fees); (iii) pay fees and undertake other activities necessary to test distributed ledger-based platforms; and (iv) hold principal non-payment stablecoin as necessary to conduct permissible activities (i.e., paying certain fees to facilitate transactions as described above), provided such holdings do not exceed quantities reasonably expected to be necessary to meet near-term demand.[[N: Id. &sect; 247.10(a)(6).]] The OCC and FDIC proposals similarly would permit PPSIs to act as principal or agent with respect to payment stablecoins and to pay fees to facilitate customer transactions, and the OCC&rsquo;s proposal likewise would permit limited holdings of non-payment stablecoin digital assets for the purpose of facilitating payment of transaction fees.</p> <p>The Framework Proposal would prohibit certain conduct by PPSIs. Two such prohibitions have attracted considerable attention from industry participants:</p> <strong>Prohibition on payment stablecoin yield</strong>. Like previous agency proposals implementing the GENIUS Act, the Framework Proposal would prohibit paying interest or yield to stablecoin holders solely for holding, using, or retaining the stablecoin. There is a rebuttable presumption reaching affiliate and white-label arrangements structured to achieve the same result.[[N: Framework Proposal &sect; 247.10.]] This approach is consistent with the OCC&rsquo;s proposal, which would likewise establish a rebuttable presumption that arrangements with affiliates or related third parties, including white-label partners, to pay interest or yield to stablecoin holders violate the prohibition. <p><strong>Tying prohibition</strong>. The Framework Proposal would implement the GENIUS Act&rsquo;s tying prohibition for every PPSI &mdash; regardless of primary regulator. It would bar a PPSI from conditioning the provision of services to a customer on the customer&rsquo;s agreement to purchase an additional product or service from the PPSI or its subsidiaries, or to refrain from obtaining an additional product or service from a competitor.[[N: Id. &sect;&sect; 247.40-.41. The Framework Proposal clarifies the applicability of the tying prohibition and describes the process for requesting exceptions from the Board.&nbsp;]]</p> <p>The Framework Proposal also, in brief, would prohibit (i) deceptive names or marketing that could suggest a stablecoin is legal tender or government guaranteed; (ii) misrepresentations regarding deposit insurance; (iii) rehypothecation of reserve assets outside narrow exceptions for margining, standard custodial services, and redemption-driven liquidity needs; and (iv) evasive conduct generally.</p> <h3>Reserve Assets</h3> <p>A Board-supervised PPSI would be required to maintain identifiable, segregated reserves with a fair value that at all times equals or exceeds the outstanding par value of its stablecoins (a one-to-one reserve requirement). Reserves could be held directly, through an eligible custodian, or through a wholly owned, liability-free special-purpose subsidiary whose assets are pledged to secure the PPSI&rsquo;s stablecoin obligations.[[N: Id. &sect; 247.11(a).]] The reserve assets would be required to consist of limited, enumerated asset categories:</p> <ul> <li>U.S. coin and currency</li> <li>Federal Reserve Bank balances</li> <li>Eligible deposit claims</li> <li>Short-dated Treasury securities and related repurchase transactions</li> <li>Interests in qualifying investment funds holding only such assets[[N: Id. &sect; 247.11(b).]]</li> </ul> <p>The Framework Proposal would also impose principles-based diversification standards requiring PPSIs to mitigate concentration in uninsured deposit claims at, or reverse repurchase exposure to, a single counterparty or small group of counterparties.[[N: Id. &sect; 247.11.]]</p> <h3>Liquidity and Redemption</h3> <p>A Board-supervised PPSI would be required to publicly disclose a redemption policy that provides for timely redemption, which generally would be required to occur within two business days. The redemption policy would be subject to extension only at the Board&rsquo;s discretion and only when warranted by safety and soundness, financial-stability, or public-interest considerations.[[N: Id. &sect; 247.12.]]</p> <h3>Capital Requirements</h3> <p>The Framework Proposal would require Board-supervised PPSIs to hold tangible equity, which would be defined to include common stock, perpetual stock, retained earnings, and accumulated other comprehensive income, less intangibles, sufficient to cover two categories of risk.[[N: Non-reserve assets would otherwise be subject to the capital treatment applicable to state member banks under 12 CFR part 217.]]</p> <p>First, capital would be required to cover a 2% charge against reserve assets held as uninsured deposit claims or undercollateralized reverse repurchase agreements (applied on a look through basis to fund holdings).[[N: Framework Proposal &sect; 247.16-17.]] Second, capital would be required to cover an operational risk charge combining (i) a graduated charge on outstanding stablecoin issuance (2.0% on the first $20 billion outstanding, 1.5% on the next $30 billion, and 1.0% above $50 billion) and (ii) a charge equal to 25% of the three-year average of non reserve asset revenue, adjusted by a loss scalar tied to realized operational losses.[[N: Id. &sect; 247.17-18.]]</p> <p>A PPSI that falls short of its capital requirement as of quarter-end would be required to submit a remediation plan. If the PPSI remains noncompliant at the following quarter-end, the Framework Proposal would mandate liquidation of reserves and redemption of outstanding stablecoins.[[N: Id. &sect; 247.18.]]</p> <h3>Risk Management Procedures</h3> <p>The Framework Proposal would impose operational and managerial standards (including insider- and affiliate-transaction limits), information-technology and security-program requirements, and AML/CFT and sanctions compliance obligations, with a deemed-compliance accommodation for PPSI subsidiaries that participate in their parent bank&rsquo;s enterprise-wide risk-management framework.[[N: Id. &sect; 247.13.]] Board-supervised PPSIs would be subject to examination on a 12-month cycle (extendable to 18 or 36 months if specified conditions are met). The Board would also require confidential weekly reports on issuance, redemption, trading volume, and reserves, in addition to quarterly financial-condition reports.[[N: Id. &sect; 247.14.]]</p> <p>Consistent with a standard the Board recently proposed for banks generally, a AML/CFT deficiency would need to be &ldquo;significant or systemic&rdquo; before triggering a supervisory or enforcement action.[[N: 12 U.S.C. &sect; 5903(a)(5)(B); Framework Proposal &sect; 213(d)(3)(i). See also 91 Fed. Reg. 42363 (July 9, 2026) (Board&rsquo;s separately proposed rulemaking applying a &ldquo;significant or systemic&rdquo; standard for AML/CFT enforcement actions with respect to banks generally).]] The Board&rsquo;s rules of practice and procedure would be revised to incorporate the GENIUS Act&rsquo;s specific procedural requirements for PPSI enforcement matters.</p> <h3>Custodians</h3> <p>The Framework Proposal would apply to Board-supervised entities that provide custody or safekeeping for stablecoin reserves, stablecoins used as collateral, private keys, or related cash and property.[[N: Framework Proposal &sect;&sect; 247.20-.23.]] Custodians would be required to treat customer property as belonging to the customer rather than the custodian, protect it from the claims of the custodian&rsquo;s (and any sub-custodian&rsquo;s) creditors, and &ldquo;maintain control&rdquo; such that no other party (including the customer or a custodian affiliate) may transfer the property without the custodian&rsquo;s affirmative consent.[[N: Id. &sect; 247.21.]] Commingling would generally be prohibited, subject to limited exceptions for identifiable omnibus accounts, cash held as a deposit liability, and routine fee withdrawals.[[N: Id. &sect; 247.22. Three exceptions would apply to the segregation requirement: (1) holding customer property in an omnibus account with other customers&rsquo; assets, provided reserves remain identifiable; (2) holding cash reserves in the form of a deposit liability; and (3) withdrawing customer property to cover routine operational charges such as commissions, taxes, or storage fees.]] The Framework Proposal would permit sub-custody, subject to oversight of the sub-custodian&rsquo;s compliance.</p> <h3>State-Qualified PPSIs</h3> <p>The Framework Proposal would implement the Board&rsquo;s enforcement authority over state qualified PPSIs in &ldquo;unusual and exigent circumstances.&rdquo; This authority would be exercisable only where such circumstances exist, the PPSI or an institution-affiliated party is violating the Act, continuation of the activity poses a serious risk to the PPSI&rsquo;s safety, soundness, or stability, and the Board has given the relevant state regulator 48 hours&rsquo; prior written notice with illustrative fact patterns.[[N: Id. &sect; 247.50.]]</p> <p>The Framework Proposal would also establish a transition and waiver process for &ldquo;covered PPSIs,&rdquo; i.e., uninsured state-chartered depository institutions with $10 billion or more in outstanding stablecoins. This process would include notification and information-submission requirements, an initial examination within six months of notification, and criteria under which the Board may waive the transition and leave the covered PPSI under state supervision alone.[[N: Id. &sect; 247.51.]]</p> <h3>Banking-Organization Amendments</h3> <p>The Framework Proposal would also implement the GENIUS Act&rsquo;s bar on requiring a parent bank or holding company to hold regulatory capital, at the consolidated level, in excess of what its PPSI subsidiary must hold under the Act.[[N: 12 U.S.C. &sect; 5903(a)(4)(C)(iii).]] To do so, the Framework Proposal would amend the Board&rsquo;s capital adequacy regulation under 12 CFR part 217 to require deconsolidation of the PPSI from the parent&rsquo;s balance sheet and a dollar-for-dollar deduction of the PPSI&rsquo;s minimum capital requirement from the parent&rsquo;s common equity tier 1 capital, rather than allowing the parent to count capital held at the PPSI level toward its own requirement.[[N: Framework Proposal amendments to 12 CFR part 217.]] The Framework Proposal would also amend Regulations H, K, and Y to confirm that state member banks, depository institution holding companies, Edge and agreement corporations, and uninsured state branches and agencies of foreign banks may engage in authorized stablecoin-related activities for Board-regulated entities.[[N: Framework Proposal amendments to 12 CFR parts 208, 211, and 225.]]</p> <h2>Compliance and Operational Implications</h2> <p>Banks and holding companies that provide custody services, either to their own PPSI subsidiary or to third-party stablecoin issuers, should map their existing custody and trust operations against the proposed &ldquo;maintain control&rdquo; standard, the omnibus-account exception, and the self-custody hardware and software exclusion, each of which may require operational or contractual changes. The proposed capital framework &mdash; a 2% charge on uninsured deposit and reverse-repo exposure, a graduated operational-risk charge, and mandatory deconsolidation from the parent&rsquo;s balance sheet &mdash; would meaningfully affect the economics of a bank-affiliated stablecoin program and should be modeled now.</p> <h2>Comment Period and Next Steps</h2> <p>Institutions evaluating a stablecoin subsidiary through a state member bank may wish to actively consider the requirements set forth in the Application Proposal as part of strategic planning efforts. Although the specific contents of an application could change in a final rule, the Application Proposal&rsquo;s requirements are designed to address the evaluation of statutory factors set out in section 5(c) of the GENIUS Act. Institutions therefore can reasonably begin developing core application materials now, including governance and control documentation, a business plan addressing requirements under the Framework Proposal, and financial projections, while recognizing that these materials may need to be updated to reflect the final Application and Framework rules.</p> <p>Capital planning also warrants early attention. The graduated operational-risk charge rewards scale and the 25% charge on non-reserve-asset revenue could affect the economics of custody, white-label, or other ancillary fee arrangements. Parent banks may wish to model the proposed deconsolidation-and-deduction approach&rsquo;s effect on their consolidated capital ratios now, as the Framework Proposal would not permit capital held at the PPSI level to satisfy the parent&rsquo;s own requirement.</p> <p>The Application Proposal poses 23 specific questions on which the Board invites comment, while the Framework Proposal poses 254. Comments on both proposals are due November 30, 2026. Key comment topics include:</p> <ul> <li>Whether the Application Proposal should adopt additional factors, including a standalone safety-and-soundness factor for the impact on the applicant bank.</li> <li>The Application Proposal&rsquo;s first statutory factor would require demonstrating the proposed PPSI&rsquo;s financial ability to meet Framework Proposal capital requirements, yet would only require an applicant to show sufficient initial capital under its business plan &mdash; without specifying how to demonstrate forward compliance with standards that could change before taking effect.</li> <li>Whether the Board will require single-brand issuance, permit multi-brand issuance with brand-level reserve segregation, or adopt another approach.</li> <li>The Application Proposal would use a 10% &ldquo;principal shareholder&rdquo; threshold for biographical reporting purposes, while the Framework Proposal would define a distinct &ldquo;covered shareholder&rdquo; concept (25% ownership or voting-control, with a rebuttable 10% presumption) for insider- and affiliate-transaction limits. Commenters may wish to ask the Board to reconcile these definitions.</li> <li>Both Proposals pose open questions on which the Board has signaled genuine openness, including yield-prohibition presumption scope and rebuttal, reserve-asset diversification calibration, and multi-brand structuring.</li> <li>Interagency inconsistencies: The FDIC would require self-reporting of &ldquo;significant redemption requests&rdquo; (exceeding 10% of outstanding issuance within 24 hours) and would permit FDIC discretion on extensions, while the OCC would impose an automatic seven-day extension upon a comparable trigger, liftable only at its discretion. The Board&rsquo;s Framework Proposal, in contrast, would not adopt either agency&rsquo;s specific trigger.</li> </ul> <p>If you would like to discuss the Board&rsquo;s proposals or determine whether to comment, please contact any of the authors of this Advisory or your usual firm contact.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{A991ECF2-467A-4650-920B-E7155ECE5B17}https://www.arnoldporter.com/en/perspectives/publications/2026/10/the-chemical-compoundCamille Heyboerhttps://www.arnoldporter.com/en/people/h/heyboer-camillecamille.heyboer@arnoldporter.comKatrina R. Umsteadhttps://www.arnoldporter.com/en/people/u/umstead-katrinakatrina.umstead@arnoldporter.comLawrence E. Culleenhttps://www.arnoldporter.com/en/people/c/culleen-lawrence-elawrence.culleen@arnoldporter.comBrandon W. Neuschaferhttps://www.arnoldporter.com/en/people/n/neuschafer-brandon-wbrandon.neuschafer@arnoldporter.comTom Foxhttps://www.arnoldporter.com/en/people/f/fox-tomTom.Fox@arnoldporter.comThis edition of our quarterly newsletter on chemical regulatory developments provides updates on litigation, regulatory, legislative, and policy developments of importance to our clients. The newsletter focuses on actions affecting chemical substances that are the subject of ongoing regulatory activity or scrutiny by federal, state, and international authorities, as well as developments in related litigation.Thu, 08 Oct 2026 00:00:00 -0500<p>This edition of our quarterly newsletter on chemical regulatory developments provides updates on litigation, regulatory, legislative, and policy developments of importance to our clients. The newsletter focuses on actions affecting chemical substances that are the subject of ongoing regulatory activity or scrutiny by federal, state, and international authorities, as well as developments in related litigation. These include, among others, per- and polyfluoroalkyl substances (PFAS) and other chemicals of concern to the U.S. Environmental Protection Agency (EPA or the Agency) under the Toxic Substances Control Act (TSCA), EPA pesticide actions under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), as well as emerging regulatory frameworks in the United States and abroad. Check here each quarter for a curated presentation of the most important developments affecting chemical manufacturers, importers, processors, and users. </p> <h2>Table of Contents</h2> <ul> <li><span style="font-size: 24px;"><a href="#Key Litigation Updates">Key Litigation Updates</a></span></li> <li><span style="font-size: 24px;"><a href="#TSCA Updates">TSCA Updates</a></span></li> <li><span style="font-size: 24px;"><a href="#FIFRA Updates">FIFRA Updates</a></span></li> <li><span style="font-size: 24px;"><a href="#Other Federal Litigation Updates">Other Federal Litigation Updates</a></span></li> <li><span style="font-size: 24px;"><a href="#Legislative Updates">Legislative Updates</a></span></li> <li><span style="font-size: 24px;"><a href="#State Regulatory Updates">State Regulatory Updates</a></span></li> <li><span style="font-size: 24px;"><a href="#International Updates">International Updates</a></span></li> </ul> <p> </p> <h2><a name="Key Litigation Updates"></a>Key Litigation Updates</h2> <h3>Fifth Circuit Vacates EPA&rsquo;s Methylene Chloride Risk Management Rule and Underlying Risk Determination</h3> <p>On September 15, 2026, the Fifth Circuit vacated EPA&rsquo;s TSCA Section 6(a) risk management rule for methylene chloride, 40 C.F.R. part 751, subpart B, along with the underlying unreasonable risk determination, and remanded these actions to EPA. <em><a rel="noopener noreferrer" href="https://www.ca5.uscourts.gov/opinions/pub/24/24-60227-CV0.pdf" target="_blank">East Fork Enters., Inc. v. EPA</a></em>, Case No. 24-60227 (5th Cir. Sept. 15, 2026).&nbsp;</p> <p>With respect to the risk evaluation, the court identified four high-level errors in EPA&rsquo;s approach:&nbsp;</p> <ol> <li>EPA lacked authority to issue a &ldquo;whole chemical&rdquo; risk determination: TSCA requires a determination for each condition of use, and EPA&rsquo;s own procedural rule had required use-by-use determinations until the Agency adopted (without, in the court&rsquo;s view, an adequate basis) a contrary reading in November 2022.&nbsp;</li> <li>EPA&rsquo;s assumption that workers do not use personal protective equipment (PPE) was contrary to law and unsupported because the use of PPE is reasonably foreseeable.&nbsp;</li> <li>EPA&rsquo;s approach to identifying &ldquo;unreasonable risk&rdquo; was &ldquo;far more conservative&rdquo; than the statute permits; TSCA is not a zero-risk statute, and unreasonable risk &ldquo;must allow for some risk.&rdquo;&nbsp;</li> <li>EPA&rsquo;s acute and chronic exposure limits of 16 ppm and 2 ppm &mdash; roughly one-tenth of the longstanding Occupational Safety and Health Administration (OSHA) limits &mdash; rested on selective use of the available scientific information and excessive uncertainty factors.&nbsp;</li> </ol> <p>The court further held that EPA exceeded its authority in prohibiting 40 of 53 conditions of use of methylene chloride because TSCA permits regulation only &ldquo;to the extent necessary,&rdquo; and EPA improperly selected risk management measures based on an absence of evidence that alternative measures were achievable (thus shifting to regulated entities the burden of showing such alternative measures were achievable). The court also denied the Sierra Club&rsquo;s petition for review of this rule, which had argued that EPA violated TSCA by failing to make unreasonable risk determinations relating to exposures to communities at the fenceline of facilities using methylene chloride and by failing to evaluate methylene chloride&rsquo;s depletion of the ozone layer.[[N: Additional discussion of this case and the Fifth Circuit&rsquo;s holding is available in our <a href="/en/perspectives/blogs/environmental-edge/2026/09/fifth-circuit-vacates-epas-tsca-risk-management-rule-for-methylene-chloride">September 2026 Blog post</a>.]] On October 2, 2026, the Fifth Circuit issued the mandate in this case, thus effectuating the vacatur of EPA&rsquo;s methylene chloride rule and associated risk determination and remanding the actions to EPA for further proceedings.&nbsp;</p> <p>The decision is likely to have impacts far beyond methylene chloride, as it unsettles numerous interpretations of TSCA that EPA has applied across its Section 6 existing chemicals program (as well as some that it has also applied in its Section 5 new chemicals program). Companies with substances subject to completed risk evaluations, pending Section 6(a) rulemakings, or draft risk evaluations should consider engaging with EPA as it reconsiders these actions in light of the Fifth Circuit&rsquo;s ruling.</p> <h3>Supreme Court Holds That FIFRA Preempts State Failure-to-Warn Claims</h3> <p>On June 25, 2026, the U.S. Supreme Court decided <em><a rel="noopener noreferrer" href="https://www.supremecourt.gov/opinions/25pdf/24-1068_n7ip.pdf?nbsp=" target="_blank">Monsanto Co. v. Durnell</a></em>, No. 24-1068, holding 7-2 that FIFRA expressly preempts state law failure-to-warn claims that would require a pesticide label to carry a warning EPA has not required under FIFRA. The Court reversed a Missouri Court of Appeals decision that had rejected Monsanto&rsquo;s preemption defense and affirmed a $1.25 million verdict.&nbsp;</p> <p>Justice Kavanaugh, writing for the Court, identified two federal labeling requirements imposed &ldquo;under&rdquo; FIFRA: obtaining EPA approval of a label at registration, and using the approved label unless and until EPA approves or requires a different one. Because EPA has repeatedly concluded that glyphosate is not likely to cause cancer, Monsanto was required by federal law to use a label without a cancer warning, and a state law duty to add such a warning would impose a requirement &ldquo;in addition to or different from&rdquo; federal law, which is prohibited under FIFRA Section 24(b). Justice Thomas concurred, raising separate concerns about FIFRA&rsquo;s constitutional architecture. Justice Jackson, joined by Justice Gorsuch, dissented, arguing that FIFRA limits but does not eliminate state authority over labeling and that states may impose requirements equivalent to those under FIFRA.</p> <p>Going forward, the strength of a pesticide registrant&rsquo;s preemption defense will likely turn on how specifically EPA considered the particular risk during registration or reregistration, which places a premium on the administrative record. Claims not predicated on labeling, including design defect, manufacturing defect, and advertising claims, remain available to plaintiffs.</p> <h2><a name="TSCA Updates"></a>TSCA Updates</h2> <h3>EPA Releases Series of Draft Risk Evaluations</h3> <p>Between July and September 2026, EPA released draft risk evaluations for seven chemical substances: o-dichlorobenzene, p-dichlorobenzene, ethylene dibromide, trans-1,2,-dichloroethylene, 1,2-dichloropropane, TBBPA, and 1,1,2-trichloroethane. As outlined in the table below, EPA faces a February 12, 2027 deadline to finalize these seven risk evaluations, as well as the risk evaluations for HHCB, TPP, and phathalic anhydride. However, it is unclear whether EPA intends to revisit these risk evaluations in light of the Fifth Circuit&rsquo;s ruling in <em>East Fork Enterprises</em> and, if so, whether the Agency intends to seek an extension of the deadline for their completion.&nbsp;</p> <h4 style="text-align: center;">February 2027 Final Risk Evaluation Deadlines</h4> <table style="width: 837.667px; height: 421.833px;"> <tbody> <tr> <td style="text-align: left;"><strong>&nbsp;Chemical Substance</strong></td> <td style="text-align: left;"><strong>Current Status</strong></td> </tr> <tr> <td style="text-align: left;">&nbsp;o-dichlorobenzene</td> <td style="text-align: left;">&nbsp;Draft Risk Evaluation</td> </tr> <tr> <td style="text-align: left;">&nbsp;p-dichlorobenzene</td> <td style="text-align: left;">&nbsp;<span>Draft Risk Evaluation</span></td> </tr> <tr> <td style="text-align: left;">&nbsp;trans-1,2-dichloroethylene</td> <td style="text-align: left;">&nbsp;Draft Risk Evaluation</td> </tr> <tr> <td style="text-align: left;">&nbsp;1,2-dichloropropane</td> <td style="text-align: left;">&nbsp;Draft Risk Evaluation</td> </tr> <tr> <td style="width: 500px; text-align: left;">&nbsp;Ethylene dibromide</td> <td style="text-align: left;">&nbsp;Draft Risk Evaluation</td> </tr> <tr> <td style="text-align: left;">&nbsp;1,3,4,6,7,8-hexahydro-4,6,6,7,8,8-hexamethylcyclopenta[g]-2-benzopyran 2 (HHCB)</td> <td style="text-align: left;">&nbsp;Draft Risk Evaluation</td> </tr> <tr> <td style="text-align: left;">&nbsp;4,4&rsquo;-(1-methylethylidene)bis[2,6- dibromophenol (TBBPA)</td> <td style="text-align: left;">&nbsp;Draft Risk Evaluation</td> </tr> <tr> <td style="text-align: left;">&nbsp;Phosphoric acid, triphenyl ester (TPP)</td> <td style="text-align: left;">&nbsp;Final Scope</td> </tr> <tr> <td style="text-align: left;">&nbsp;Phthalic anhydride</td> <td style="text-align: left;">&nbsp;Draft Risk Evaluation</td> </tr> <tr> <td style="text-align: left;">&nbsp;1,1,2-trichloroethane</td> <td style="text-align: left;">&nbsp;Draft Risk Evaluation</td> </tr> </tbody> </table> <p>&nbsp;</p> <p>Additionally, from August 3-7, the Science Advisory Committee on Chemicals (SACC) <a rel="noopener noreferrer" href="https://www.epa.gov/tsca-peer-review/peer-review-evaluating-112-tca-12-dcp-tbbpa-edb-and-tdce" target="_blank">held a public peer review meeting</a> addressing certain draft assessments and technical support documents supporting the risk evaluations for TBBPA, ethylene dibromide, trans-1,2-dichloroethylene, 1,1,2-trichloroethane, and 1,2-dichloropropane. In many instances, EPA explained that it was seeking SACC review of &ldquo;unique and novel scientific approaches&rdquo; used in the assessments, such as new approach methods including transcriptomics (a high-throughput method for assessing mRNA expression in different tissues used to consider the potential impacts of certain substances or conditions at the cellular level).</p> <p>A summary of these draft risk evaluations, including the conditions of use (COUs) that EPA has preliminarily determined do or do not present unreasonable risk, and the deadlines for comments on these risk evaluations are provided below. Companies whose products or processes involve any of the substances below should review EPA&rsquo;s draft risk evaluations with a focus on ensuring that the conditions of use identified by EPA accurately reflect real-world conditions &mdash; including the use of engineering controls and PPE &mdash; and assessing whether the Agency has relied upon the best available science in reaching its unreasonable risk determinations. Engagement at the risk evaluation stage is important because of the scope of the uses found to present an unreasonable risk at this stage dictates the scope of the future TSCA Section 6(a) risk management rule to address such unreasonable risk.</p> <h3>Risk Evaluations for o-Dichlorobenzene and p-Dichlorobenzene</h3> <p>On August 10, 2026, EPA <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/08/10/2026-16263/o-dichlorobenzene-and-p-dichlorobenzene-draft-risk-evaluations-under-the-toxic-substances-control" target="_blank">published a Federal Register notice</a> announcing the availability of draft risk evaluations for <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2026-08/01-o-dichlorobenzene-draft-risk-evaluation-public-release-august-2026.pdf" target="_blank">o-dichlorobenzene (o-DCB)</a> and <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2026-08/01-p-dichlorobenzene-draft-risk-evaluation-public-release-august-2026.pdf" target="_blank">p-dichlorobenzene (p-DCB)</a>. These draft risk evaluations follow the draft hazard assessments EPA released for both substances in April 2026, which were the subject of SACC peer review in June. o-DCB is processed for use as a reactant and incorporated into formulations, mixtures, or reaction products; its uses include solvent use in dyes and pigments and use in lubricants, degreasers, inks, and paint strippers. p-DCB is used in thermoplastic manufacture, solvents, and air-care products, including continuous-action air fresheners. The public comment period for these draft risk evaluations closes on October 9, 2026.</p> <p>For o-DCB, EPA preliminarily identified 15 of 24 conditions of use as significantly contributing to unreasonable risk: 14 COUs involving risks to workers, a subset of which also pose risk to occupational non-users (ONUs), and one consumer condition of use. For p-DCB, EPA preliminarily identified eight of 23 conditions of use as significantly contributing to unreasonable risk: seven worker conditions of use, five of which also present risk to occupational non-users, and one consumer condition of use. For both substances, EPA did not preliminarily identify unreasonable risk to the general population, fenceline communities, or the environment.&nbsp;</p> <h3>Risk Evaluation for Ethylene Dibromide</h3> <p>On August 19, 2026, EPA <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2026-08/01-ethylene-dibromide-draft-risk-evaluation-public-release-august-2026.pdf" target="_blank">released its draft risk evaluation for ethylene dibromide</a> and <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/08/19/2026-16919/ethylene-dibromide-draft-risk-evaluation-under-the-toxic-substances-control-act-tsca-notice-of" target="_blank">announced a public comment period</a> running through October 19, 2026. Ethylene dibromide is used primarily as a fuel additive, and also in plastic and resin manufacturing and in pigment and dye manufacturing.</p> <p>EPA did not identify unreasonable risk to consumers, the general population, or the environment. It did identify unreasonable risk to workers across 10 conditions of use, and unreasonable risk to ONUs for four of these conditions of use.&nbsp;</p> <h3>Risk Evaluation for Trans-1,2-Dichloroethylene</h3> <p>On August 27, 2026, EPA <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2026-08/01-tdce-draft-risk-evaluation-public-release-august-2026.pdf" target="_blank">released its draft risk evaluation</a> for trans-1,2-dichloroethylene (trans-1,2-DCE), with <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/08/27/2026-17478/trans-12-dichloroethylene-draft-risk-evaluation-under-the-toxic-substances-control-act-tsca-notice" target="_blank">comments due October 26, 2026</a>. EPA preliminarily identified 19 conditions of use as significantly contributing to unreasonable risk to workers and ONUs, including manufacturing, processing, and a range of industrial and commercial uses. EPA also preliminarily identified consumer use as a cleaner/degreaser as contributing to unreasonable risk. The draft did not preliminarily identify unreasonable risk for industrial and commercial semiconductor and photovoltaic etching and cleaning processes, laboratory chemical use, distribution in commerce, disposal, or consumer polymer foam use.&nbsp;</p> <h3>Risk Evaluation for 1,2-Dichloropropane&nbsp;</h3> <p>On September 2, 2026, EPA <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/09/04/2026-18117/12-dichloropropane-draft-risk-evaluation-under-the-toxic-substances-control-act-tsca-notice-of" target="_blank">released its draft risk evaluation</a> for 1,2-dichloropropane (1,2-DCP), along with a <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/09/04/2026-18117/12-dichloropropane-draft-risk-evaluation-under-the-toxic-substances-control-act-tsca-notice-of" target="_blank">notice of availability announcing</a> the opening of a public comment period. Comments are due November 3, 2026. EPA preliminarily identified 11 conditions of use as significantly contributing to unreasonable risk to workers and ONUs from inhalation and dermal exposure, and three consumer uses &mdash; as a cleaner, polish, or wax &mdash; as contributing to unreasonable risk. The draft did not identify unreasonable risk to the general population, including fenceline communities, or the environment.&nbsp;</p> <h3>Risk Evaluation for TBBPA</h3> <p>On June 16, 2026, EPA <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/06/16/2026-12012/44-1-methylethylidenebis26-dibromophenol-tbbpa-risk-evaluation-under-the-toxic-substances-control" target="_blank">announced the availability</a> of its <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2026-06/01-tbbpa-draft-risk-evaluation-public-release-june-2026.pdf" target="_blank">draft risk evaluation</a> for 4,4&rsquo;-(1-methylethylidene)bis[2,6-dibromophenol] (TBBPA). TBBPA is an additive and reactive flame retardant used in electronic enclosures, electronic consumer products with plastic casings, printed circuit boards, textiles, leather products, and construction materials. The public comment period closed August 17, 2026.</p> <p>EPA preliminarily determined that three of 24 conditions of use significantly contribute to unreasonable risk to workers through inhalation: domestic manufacture, import, and repackaging. EPA also preliminarily identified one processing condition of use as significantly contributing to unreasonable risk to the environment. EPA did not identify significant contributions to unreasonable risk for occupational non-users, consumers, or the general population, including fenceline communities. Notably, the Agency specifically requested information on occupational exposure assumptions, including engineering controls and PPE, which will be important to the final risk evaluation and any subsequent Section 6(a) risk management rulemaking.&nbsp;</p> <h3>Risk Evaluation for 1,1,2-Trichloroethane</h3> <p>On July 29, 2026, EPA <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/07/29/2026-15267/112-trichloroethane-draft-risk-evaluation-under-the-toxic-substances-control-act-tsca-notice-of" target="_blank">announced the availability</a> of and requested public comment on the <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2026-07/01-1-1-2-trichloroethane-draft-risk-evaluation-public-release-june-2026.pdf" target="_blank">draft risk evaluation</a> for 1,1,2-trichloroethane. According to EPA, the draft identifies significant contributions to unreasonable risk to workers from dermal and inhalation exposure across 10 occupational conditions of use, and does not identify unreasonable risk to consumers, the general population, or the environment. Comments were due September 28, 2026.&nbsp;</p> <h3>EPA Extends Certain Compliance Dates for the PCE and CTC Risk Management Rules</h3> <p>On July 28, 2026, EPA <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/07/28/2026-15192/perchloroethylene-pce-and-carbon-tetrachloride-ctc-regulation-under-the-toxic-substances-control-act" target="_blank">issued a final rule</a> extending certain compliance dates under the TSCA Section 6(a) risk management rules for perchloroethylene (PCE) and carbon tetrachloride (CTC). 91 Fed. Reg. 47,145. Specifically, EPA stated that it was extending certain Workplace Chemical Protection Program (WCPP) compliance dates for non-federal owners and operators to align with the existing compliance dates applicable to federal agencies and their contractors.</p> <p>For both PCE and CTC, the rule extends the compliance date for initial inhalation exposure monitoring to June 21, 2027, and extends to September 20, 2027 the compliance dates for meeting the existing chemical exposure limit (ECEL), establishing a regulated area, instituting a workplace information and training program, providing required respiratory PPE, and establishing a respiratory PPE program. For PCE specifically, EPA also extended the compliance date for federal entities to institute a workplace information and training program to September 20, 2027, and for non-federal entities to establish and implement an exposure control plan to December 20, 2027. The rule was effective on publication.</p> <p>The extension does not alter the substantive WCPP obligations, though EPA has also been considering whether amendments to the final PCE or CTC rules (which may include amendments to the WCPP provisions) are necessary. Until any such amendments are finalized, companies subject to the PCE or CTC rules should use the additional time provided under the compliance date extension rule to ensure that they understand the requirements of the rule and begin building out compliance programs rather than treating the new dates as an indication that the requirements will be revisited.&nbsp;</p> <h3>EPA&rsquo;s Delayed 2026 Unified Agenda Sets Out Timelines for TSCA Rulemakings</h3> <p>In early July, the Office of Information and Regulatory Affairs (OIRA) released the <a rel="noopener noreferrer" href="https://www.reginfo.gov/public/do/eAgendaMain" target="_blank">2026 Regulatory Plan and Unified Agenda of Federal Regulatory and Deregulatory Actions</a> (the Unified Agenda), which includes several EPA actions of significance for companies subject to TSCA. In the best of times, the deadlines in the Unified Agenda should be treated as estimates, rather than operative deadlines. This is even more true following the Fifth Circuit&rsquo;s decision in <em>East Fork Enterprises</em> (discussed in further detail above), as EPA will likely have to revisit existing proposed and final rules and those under development, leading to further delays. The Unified Agenda is therefore most useful as a statement of EPA&rsquo;s sequencing and priorities, rather than as a reliable calendar. For those actions that are submitted to the Office of Management and Budget (OMB) for review prior to release, the <a rel="noopener noreferrer" href="https://www.reginfo.gov/public/do/eoPackageMain" target="_blank">public docket shows</a> when a proposed or final rule has been received.</p> <p>The Unified Agenda listed July 2026 as the estimated final action date for both the revised TSCA risk evaluation framework rule and the TSCA Section 6(a) risk management rule for N-methylpyrrolidone (NMP), and August 2026 for the final rule for 1-bromopropane (1-BP). EPA also listed estimated proposal dates for a number of amended and new TSCA Section 6 rules: July 2026 for amendments to the perchloroethylene (PCE), trichloroethylene (TCE), and carbon tetrachloride (CTC) rules; July 2026 for compliance date extensions covering methylene chloride, TCE, PCE, and CTC; and August 2026 to December 2026 for new TSCA Section 6 rules for diisodecyl phthalate (DIDP), formaldehyde, cyclic aliphatic bromide cluster (HBCD), diisononyl phthalate (DINP), and tris(2-chloroethyl) phosphate (TCEP). OMB is currently reviewing compliance date extensions for the TSCA Section 6 rule for TCE. None of the other proposed or final rules have been released or even sent to OMB for review prior to release.&nbsp;</p> <p>The Unified Agenda also references two non-chemical-specific proposed TSCA Section 6 rules. First, the &ldquo;Laboratory Requirements under the Toxic Substances Control Act&rdquo; rule is described as intended to &ldquo;address the unreasonable risk presented by laboratory use of chemicals that have undergone a TSCA risk evaluation.&rdquo; The Unified Agenda states that EPA is initiating this rulemaking so that laboratory-related requirements are consistent across all chemicals evaluated under Section 6, and that it intends to consider existing OSHA standards, including OSHA&rsquo;s laboratory standard, to avoid conflicting or duplicative regulation. The estimated proposal date is October 2026. Second, the &ldquo;Toxic Substances Control Act (TSCA) Risk Management Rules and Critical Uses for Federal Agencies&rdquo; rule, a previously listed action, would allow federal agencies and their contractors to continue using certain chemical substances temporarily under specified conditions of use where necessary to prevent significant disruptions to the national economy, national security, or critical infrastructure. The estimated proposal date is December 2026. The status of these proposed rules is unknown; neither rule has yet been sent to OMB for review.&nbsp;</p> <p>Finally, the proposed amendments to the TSCA Section 8(a)(7) PFAS reporting rule appear on the Unified Agenda with an estimated final rule date of July 2026. As with the other rules, the July 2026 estimate has now passed without a final rule and the status of these amendments is unknown.&nbsp;</p> <h3>Reminder: TSCA CBI Claims Are Now Expiring on a Rolling Basis</h3> <p>Confidential business claims (CBI) asserted under the 2016 TSCA amendments began expiring in June 2026, 10 years after the first claims were asserted under the amended statute. EPA continues to <a rel="noopener noreferrer" href="https://www.epa.gov/tsca-cbi/cbi-claim-expiration" target="_blank">publish monthly lists of expiring claims</a>. To extend a claim, a submitter must file a request with substantiation no later than 30 days before the claim&rsquo;s expiration date. Claims made as part of a 2016 Chemical Data Reporting (CDR) submission will expire no later than October 31, 2026, which means extension requests for those claims must have been submitted no later than October 1, 2026. Companies should review EPA&rsquo;s lists of expiring claims as they are released monthly, confirm whether any of their claims cover information that remains commercially sensitive, verify that their Central Data Exchange access is current, and prepare substantiation materials. As EPA emphasized in its May webinar, substantiation that was adequate when a claim was first asserted may not suffice to support an extension.</p> <h3>EPA Office of Inspector General to Evaluate the TSCA Priority Testing List</h3> <p>On August 4, 2026, EPA&rsquo;s Office of Inspector General (OIG) <a rel="noopener noreferrer" href="https://www.epa.gov/office-inspector-general/notification-evaluation-toxic-substances-control-act-priority-testing-list" target="_blank">announced that it will evaluate</a> the TSCA Priority Testing List, following an OIG Hotline complaint. OIG&rsquo;s stated objectives are to determine the extent to which the TSCA Interagency Testing Committee (ITC) is updating the Priority Testing List every six months, as TSCA Section 4(e) contemplates, and the extent to which EPA is addressing chemicals on the updated list. The most recent ITC report published in the Federal Register was issued in April 2021.</p> <p>The evaluation is directed at EPA rather than at regulated entities, but its outcome could prompt renewed ITC activity. Companies manufacturing or importing substances that have previously appeared on, or been recommended for, the Priority Testing List may wish to track this evaluation, as a revived list could feed into future Section 4 test orders or prioritization decisions.</p> <h3>New and Proposed SNURs</h3> <p>In July and August 2026, EPA proposed two batches of significant new use rules (SNURs), finalized one batch of SNURs, and finalized one standalone SNUR relating to chemical substances that were the subject of premanufacture notices and are also subject to TSCA Section 5(e) orders.&nbsp;</p> <p>EPA <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/07/23/2026-14877/significant-new-use-rules-on-certain-chemical-substances-26-3" target="_blank">proposed a batch of SNURs</a> on July 23, 2026 for more than two dozen chemical substances with uses including use as an electrolyte additive, use in laundry detergents, use in paints, coatings, and inks, and use in photolithography. 91 Fed. Reg. 46,364. Comments were due on these proposed SNURs on August 24, 2026. Additionally, on July 30, 2026, EPA <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/07/30/2026-15352/significant-new-use-rules-on-certain-chemical-substances-26-4" target="_blank">proposed a batch of SNURs</a> covering more than one dozen chemical substances with uses including use as a catalyst, use as a fragrance in household consumer products, use as a surfactant, and use in photolithography. Comments were due on these proposed SNURs on August 31, 2026.&nbsp;</p> <p>Separately, on July 24, 2026, EPA <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/07/24/2026-14994/significant-new-use-rule-on-a-certain-chemical-substance-multi-walled-carbon-nanotubes" target="_blank">published a final SNUR</a> for multi-walled carbon nanotubes (P-22-163), effective September 22, 2026. 91 Fed. Reg. 46,742. This final SNUR is notable with respect to its treatment of articles. The import and processing of a chemical substance as part of an article is a long-standing exemption from SNUR requirements. 40 C.F.R. &sect; 721.45(f). While this final SNUR does not make the articles exemption fully inapplicable, it does articulate that the articles exemption ceases to apply once the article &ldquo;has been shredded or processed such that dust containing the substance is generated.&rdquo; This appears to be the first instance of a SNUR in which EPA seeks to revoke the articles exemption at a certain point in the lifecycle of the chemical substance subject to the SNUR (rather than just making the articles exemption applicable or inapplicable from the outset). This approach is likely to add complexity both to regulated parties using the chemical substance subject to the SNUR and to EPA&rsquo;s efforts to enforce the SNUR.</p> <p>Finally, on August 26, 2026, EPA <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2025/11/03/2025-19756/significant-new-use-rules-on-certain-chemical-substances-24-55e" target="_blank">finalized a batch of more than two dozen SNURs</a> originally proposed in November 2025. The chemical substances subject to these final SNURs have uses including as electrolyte additives, use in oil and gas production, use as an additive in agricultural formulations, use as a mining and mineral processing agent, and use as a component in battery manufacturing.&nbsp;</p> <p>Companies with chemical substances that have been the subject of recent TSCA Section 5(e) consent orders or consent order modifications should monitor EPA&rsquo;s publications of proposed SNURs to ensure that the terms of each proposed SNUR accurately reflect the terms of the consent order. Where the terms of the proposed SNUR differ from the terms of the consent order, companies should be prepared to engage with EPA to understand whether such differences are intentional and to understand how the proposed SNUR (if finalized) could impact their uses. Other companies should also continue to monitor proposed SNURs even where the chemical identity is described generically, since a generic identity does not eliminate the possibility that a company&rsquo;s substance is covered. Where a SNUR describes a substance generically or does not publicly disclose the specific chemical identity, a bona fide intent to manufacture, import, or process submission under 40 C.F.R. &sect; 721.11 remains the mechanism for determining whether a particular substance is subject to the rule.</p> <h2><a name="FIFRA Updates"></a>FIFRA Updates</h2> <h3>Draft Fungicide Strategy Comment Period Closes; Final Strategy Expected by End of November<span style="font-size: 13px;"></span></h3> <p>EPA <a rel="noopener noreferrer" href="https://www.regulations.gov/document/EPA-HQ-OPP-2026-2973-0002" target="_blank">published its Draft Fungicide Strategy</a> for public comment on April 30, 2026. The comment period closed June 29, 2026. EPA has stated that it intends to finalize the Fungicide Strategy by the end of November 2026. Registrants and users of agricultural fungicides should prepare for the possibility that the final strategy will outline geographically based mitigation measures that may be applied where EPA identifies the potential for population-level impacts to listed species &mdash; consistent with the approach EPA has taken in its Herbicide and Insecticide Strategies &mdash; and that EPA will work to implement these measures through the registration review of existing fungicides and the registration of new fungicides.</p> <h3>EPA Releases Additional MyPeST Resources for Pesticide Submissions</h3> <p>EPA&rsquo;s Office of Pesticide Programs has <a rel="noopener noreferrer" href="https://www.epa.gov/pesticide-labels/pesticide-product-bilingual-labeling-tracking-and-reporting" target="_blank">issued updated guidance</a> for MyPeST, the web-based system replacing the Pesticide Submission Portal, which provides registrants with application status tracking and bilingual labeling compliance management. Version 3.0.1 of the <a rel="noopener noreferrer" href="https://www.epa.gov/pesticide-labels/pesticide-product-bilingual-labeling-tracking-and-reporting" target="_blank">MyPeST User Guide</a>, dated July 8, 2026, is now available. EPA has indicated that the User Guide is updated regularly, so registrants should confirm they are working from the current version before preparing submissions.</p> <h2><a name="Other Federal Litigation Updates"></a>Other Federal Litigation Updates</h2> <h3><span> </span>Ninth Circuit Rejects Challenges to EPA&rsquo;s New Chemicals Regulations<span style="font-size: 13px;"></span></h3> <p>On August 13, 2026, the Ninth Circuit heard oral argument in challenges brought by Alaska Community Action on Toxics (ACAT) and the United Automobile Workers (UAW) to EPA&rsquo;s <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2024/12/18/2024-28870/updates-to-new-chemicals-regulations-under-the-toxic-substances-control-act-tsca" target="_blank">2024 final rule</a> amending the new chemicals regulations at 40 C.F.R. parts 720 and 723. ACAT challenged the provision in 40 C.F.R. &sect; 723.50 providing that persistent, bioaccumulative, and toxic (PBT) substances are eligible for low volume exemptions (LVEs) and low release and exposure exemptions (LoREXs), arguing that the nature of PBT substances makes it impossible for EPA to find that low volumes or low releases will not present unreasonable risk. EPA argued that it evaluates each request on a case-by-case basis, but was notably unable to tell the court whether it had ever approved an LVE or LoREX for a PBT substance under the rule. UAW&rsquo;s challenge concerned transparency in new chemicals review &mdash; specifically, EPA&rsquo;s failure to do more in the 2024 final rule to make the new chemicals process more transparent to the public and worker groups. EPA argued that this issue fell outside the scope of the rulemaking, and thus it was not required to respond to UAW&rsquo;s comments on this issue.</p> <p>On August 26, 2026, the Ninth Circuit issued a decision denying the challenges from ACAT and UAW. The court held that it was reasonable and consistent with its authority under TSCA for EPA to choose to consider LVE and LoREX eligibility for PBTs on a case-by-case basis (rather than making PBTs categorically ineligible). The court also agreed with EPA that the issues raised in UAW&rsquo;s comments were outside of the scope of the rulemaking, and thus EPA was not required under the Administrative Procedure Act to substantively respond to these comments.&nbsp;</p> <h3>NGOs Challenge EPA Approval of Two New Semiconductor Chemicals</h3> <p>On August 14, 2026, CHIPS Communities United and the Sierra Club <a rel="noopener noreferrer" href="https://earthjustice.org/wp-content/uploads/2026/08/petitions_for_review_p-26-0029_p-26_0045_filed.pdf" target="_blank">filed petitions for review</a> in the Ninth Circuit challenging two TSCA Section 5 consent orders authorizing the manufacture, processing, distribution in commerce, use, and disposal of new substances for semiconductor manufacturing. Earthjustice, which represents CHIPS Communities United and the Sierra Club, has previewed its arguments that EPA authorized the substances notwithstanding its identification of potential serious health risks and its acknowledgment that it lacked the information needed to calculate the full extent of those risks. Substantive briefing in this case is expected to begin in April 2027.</p> <p>Together with the ACAT and UAW challenges to EPA&rsquo;s new chemicals regulations, this petition for review reflects sustained nongovernmental organization (NGO) attention on EPA&rsquo;s new chemicals program. Submitters should anticipate a potential increase in judicial challenges to Section 5 consent orders, particularly where EPA has identified possible risk and allowed manufacture to move forward pending the development of further information.&nbsp;</p> <h3>EPA Files Status Report in Risk Evaluation Framework Rule Litigation</h3> <p>On August 17, 2026, EPA filed a status report in <em>Community In-Power &amp; Development Association v. EPA</em>, Case No. 1:23-cv-2415 (D.D.C.), the litigation challenging its Risk Evaluation Framework Rule at 40 C.F.R. part 702, subpart B. The report provides no substantive detail, stating only that EPA is considering the comments received on its September 2025 proposed amendments and will provide a further update in 90 days. The framework rule governs how EPA scopes and conducts every existing chemical risk evaluation, and continuing uncertainty about its final form complicates planning for companies with substances in or approaching the pipeline. The Unified Agenda&rsquo;s July 2026 estimate for a final rule has passed, and the timing of the final rule (particularly in light of the <em>East Fork Enterprises </em>decision) is uncertain.&nbsp;</p> <h3>Fifth Circuit Grants Further Stay in 1,4-Dioxane Risk Evaluation Litigation</h3> <p>On September 28, 2026, EPA filed an unopposed motion in the Fifth Circuit to extend the stay in <em>Union Carbide Corp. v. EPA</em>, Case No. 24-60615 (5th Cir.), the litigation challenging revisions to EPA&rsquo;s TSCA risk evaluation for 1,4-dioxane. On October 1, 2026, the Fifth Circuit granted this motion, extending the stay to December 28, 2026. The extension gives EPA additional time to consider possible revisions to its cancer assessment and the risk evaluation more broadly, particularly in light of the Fifth Circuit&rsquo;s decision in <em>East Fork Enterprises</em>. The continued pause leaves the timing and substance of a final amended risk evaluation &mdash; and any eventual Section 6(a) risk management rule &mdash; uncertain.</p> <h2><a name="Legislative Updates"></a>Legislative Updates<span style="font-size: 13px;"></span></h2> <h3>Congress (Temporarily) Extends EPA&rsquo;s TSCA Fee Authority</h3> <p>On September 2, 2026, President Trump <a rel="noopener noreferrer" href="https://www.congress.gov/bill/119th-congress/house-bill/6500/text" target="_blank">signed a continuing resolution</a> to extend government funding through December 11, 2026. Included in this continuing resolution is a provision extending EPA&rsquo;s authority to collect fees under TSCA from September 30, 2026 to December 11, 2026, giving Congress time after the November 3 election to consider legislation to further extend this fee authority and possibly consider more substantive amendments to TSCA.&nbsp;</p> <h3>Bipartisan Asbestos Legislation Introduced in the Senate</h3> <p>On August 4, 2026, Senators Jeff Merkley and John Curtis, the Ranking Member and Chair of the Senate Environment and Public Works Subcommittee on Chemical Safety, Waste Management, Environmental Justice, and Regulatory Oversight, introduced the <a rel="noopener noreferrer" href="https://www.govinfo.gov/content/pkg/BILLS-119s5235is/xhtml/BILLS-119s5235is.html" target="_blank">Alan Reinstein Ban Asbestos Now Act of 2026</a>, S. 5235. The bill would prohibit the manufacture, processing, use, and distribution in commerce of commercial asbestos, would cover the six historically regulated asbestos fibers as well as richterite and winchite, and would codify federal transition requirements.</p> <h2><a name="State Regulatory Updates"></a>State Regulatory Updates<span style="font-size: 13px;"></span></h2> <h3>District of New Mexico Enjoins Enforcement of State&rsquo;s PFAS Labeling Regulations</h3> <p>On September 16, 2026, the U.S. District Court for the District of New Mexico granted a motion from the American Chemistry Council and others to preliminarily enjoin enforcement of New Mexico&rsquo;s labeling requirements for products containing intentionally added PFAS. Of note, the preliminary injunction affects only the labeling regulations promulgated pursuant to New Mexico&rsquo;s PFAS Protection Act &mdash; it does not impact the prohibitions or reporting requirements under the act.</p> <p>In granting the preliminary injunction, the court held that the plaintiffs are likely to succeed on the merits of their argument that the label requirement violates their First Amendment rights. The court disagreed with plaintiffs&rsquo; argument that the required PFAS labeling (a symbol of an Erlenmeyer flask with the word &ldquo;PFAS&rdquo; inside of it) was inherently inflammatory or controversial, instead finding that New Mexico was likely to succeed in its argument that the label is &ldquo;purely factual.&rdquo; However, in the context of granting the preliminary injunction, the court concluded that there is not a &ldquo;reasonable fit&rdquo; between the PFAS labeling requirement and the state&rsquo;s interest in &ldquo;protecting consumer health and safety, protecting the environment, and providing relevant information about the manufacturing process to consumers.&rdquo; The court found that &ldquo;consumer curiosity is not a sufficient government interest to sustain the compulsion of even a factually accurate and non-controversial statement.&rdquo; The court also noted various public statements from the New Mexico Environment Department (NMED) suggesting that the PFAS label is intended to be a warning, despite the state&rsquo;s position in litigation that it is merely informative.</p> <p>The District of New Mexico is now considering New Mexico&rsquo;s motion to dismiss the litigation. If the litigation is not dismissed, the court will then consider the labeling requirements on their merits.&nbsp;</p> <h3>New Mexico Issues Guidance on PFAS Protection Act Compliance</h3> <p>As initial deadlines under New Mexico&rsquo;s PFAS Protection Act approach, the NMED has been issuing guidance addressing the requirements of the act. NMED has <a rel="noopener noreferrer" href="https://www.env.nm.gov/pfas/manufacturers/" target="_blank">issued guidance for manufacturers</a> and <a rel="noopener noreferrer" href="https://cloud.env.nm.gov/resources/_translator.php/ZTFkM2U4M2YyNjIwMGI1MzRhNDlkNTRhMV8yMzQ4MjU~.pdf" target="_blank">Frequently Asked Questions</a> about the PFAS Protection Act and the labeling regulations promulgated under the act. The materials issued by NMED to date &mdash; particularly with respect to the labeling requirements &mdash; noticeably focus on &ldquo;consumer products&rdquo; (as opposed to industrial- or commercial-use products). The act defines a consumer product as &ldquo;tangible personal property distributed in commerce and normally used for personal, family, or household use, including categories normally used in households but designed for or sold to businesses, such as commercial carpet or floor waxes.&rdquo; Manufacturers of industrial and commercial products, components of such products, and equipment necessary to manufacture such products should carefully assess their obligations under New Mexico&rsquo;s PFAS Protection Act, as the scope of the products covered may not always be clear. Companies determining that their products are not subject to some or all requirements of the act should be certain to document their basis for this determination.&nbsp;</p> <h3>New Mexico Prepares Report on Implementation of the PFAS Protection Act</h3> <p>On August 18, 2026, NMED <a rel="noopener noreferrer" href="https://www.env.nm.gov/wp-content/uploads/2026/08/2026-08-04-OSI-NMED-Stakeholder-Presentation-on-HJM3.pdf" target="_blank">held a webinar</a> on the PFAS Protection Act and announced the opening of a 30-day public comment period on the exemptions to the act. The comment period closed September 17, 2026.</p> <p>The comment period stems from New Mexico House Joint Memorial 3 (HJM 3), passed in February 2026, which directs NMED to report to the state legislature by August 1, 2027 on three subjects: (1) the status of implementation of the act; (2) an analysis of the public health, environmental, and economic risks associated with the current exemptions under the act; and (3) recommendations for legislative action to retain, modify, or remove those exemptions. NMED has stated that it is reviewing relevant literature and consulting with other state agencies as part of this work, that it will present preliminary findings to the Radiation and Hazardous Waste Interim Committee on November 5, 2026, and that it will submit the final report to the legislature by the August 1, 2027 statutory deadline.</p> <p>Companies relying on an exemption under the act should continue to engage with NMED as it develops its report. The exemptions are the mechanism through which most product categories currently avoid the act&rsquo;s reporting and prohibition requirements and would form the basis for eligibility for a waiver from NMED&rsquo;s labeling requirements, were they to take effect. HJM 3 places all of them on the table. Companies that depend on a particular exemption and did not comment still have opportunities to engage, including ahead of NMED&rsquo;s presentation of its preliminary findings to the Radiation and Hazardous Waste Interim Committee (expected in November 2026) and its final report to the legislature. Companies should be prepared to substantiate the technical necessity of the relevant PFAS use and the economic consequences of removing the exemption, since NMED has indicated its analysis will address economic impacts.</p> <h3>Minnesota PFAS in Products Reporting Initial Deadline Has Passed</h3> <p>Manufacturers that did not request an extension or waiver were required to report by September 15, 2026. The Minnesota Pollution Control Agency <a rel="noopener noreferrer" href="https://www.pca.state.mn.us/air-water-land-climate/reporting-pfas-in-products" target="_blank">extended the initial reporting deadline</a> under the state&rsquo;s PFAS in Products law from July 1, 2026 to September 15, 2026. The window for requesting a 90-day extension or a reporting waiver closed August 16, 2026. Manufacturers whose extension requests were denied must report within 30 days after receiving the denial notice if that deadline falls after September 15. Manufacturers with approved extension requests must submit a waiver request by November 14, 2026 or an initial report by December 14, 2026.</p> <p>Reports are submitted through Minnesota&rsquo;s PFAS Reporting and Information System for Manufacturers (PRISM). Minnesota has begun to make reported data public, with more than 60,000 data points already available, and thousands more being reviewed by Minnesota prior to release.&nbsp;</p> <h3>California Enacts PFAS in Pesticides Disclosure Requirement&nbsp;</h3> <p>On September 27, 2026, California Governor Gavin Newsom <a rel="noopener noreferrer" href="https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=202520260AB1603" target="_blank">signed AB 1603</a>, a bill requiring the California Department of Pesticide Regulation (DPR) to identify in its <a rel="noopener noreferrer" href="https://www.cdpr.ca.gov/pesticide-use-in-california/pesticide-use-reporting/" target="_blank">pesticide use reporting database</a> whether a pesticide includes PFAS ingredients, to publish a list of all registered pesticides that contain PFAS pesticide ingredients, and to update such list within 60 days of registering a new pesticide containing PFAS pesticide ingredients. The legislation defines &ldquo;PFAS&rdquo; as a class of fluorinated organic chemicals containing at least one fully fluorinated carbon atom. Although this law does not impose reporting requirements on pesticide registrants, this legislation (along with the Minnesota and New Mexico reporting requirements) is illustrative of a trend towards increased transparency about the PFAS content of products.</p> <h2><a name="International Updates"></a>International Updates</h2> <h3>European Chemicals Agency Risk Assessment Committee Releases Long-Awaited TFA Opinion</h3> <p>On October 6, 2026, the European Chemicals Agency (ECHA) Risk Assessment Committee (RAC) <a rel="noopener noreferrer" href="https://echa.europa.eu/documents/10162/2842450/clh_opinion_trifluoroacetic+acid_50281_en.pdf/2569c076-ce14-f72b-1c2a-009d420eb4ad" target="_blank">released its long-awaited opinion</a> on the harmonized classification and labeling of trifluoroacetic acid (TFA). This opinion was adopted in June 2026, at which time a <a rel="noopener noreferrer" href="https://echa.europa.eu/documents/d/guest/rac77_final_minutes_en" target="_blank">summary of the high-level conclusions</a> was also released. As previewed in June, the opinion concludes that TFA and its inorganic salts should be classified as presumed human reproductive toxicants and meet the criteria for classification as persistent, mobile, and toxic (PMT) and very persistent and very mobile (vPvM). The opinion also concludes that TFA should be classified as acutely toxic by the oral and inhalation routes of exposure. Many PFAS break down into TFA. Aside from the ongoing broad European Union PFAS restriction process,[[N: For additional background on this process, please see our prior <a href="/en/perspectives/advisories/2026/03/echa-committees-advance-broad-pfas-restriction-under-reach">advisory</a>.]] this classification is likely to lead to stricter regulatory restrictions and swifter action to phase out the use of TFAs and precursor substances and may therefore have consequences affecting users of precursor products (including certain pesticides and fluorinated gases). This opinion will now be transmitted to the European Commission, which will consider whether to adopt revisions to the Classification, Labelling, and Packaging (CLP) Regulation.&nbsp;</p> <h3>United Nations Report Calls PFAS a &ldquo;Profound Threat to Human Rights&rdquo;</h3> <p>On September 14, 2026, a Special Rapporteur of the United Nations Human Rights Council <a rel="noopener noreferrer" href="https://docs.un.org/en/A/HRC/63/27?_gl=1*x0w2m8*_gcl_au*MTkzMjE2NjQyOS4xNzg5NjYzMjc1*_ga*MzI1ODE2Nzc2LjE3ODk2NjMwMzQ.*_ga_S5EKZKSB78*czE3ODk2ODkwMzIkbzMkZzEkdDE3ODk2ODkxOTgkajYwJGwwJGgw" target="_blank">released its report </a>entitled &ldquo;Forever Chemicals and Human Rights.&rdquo; The report discusses the properties of PFAS and the potential exposure pathways for PFAS and associated health impacts, and describes PFAS exposure as a &ldquo;global environmental justice&rdquo; issue. The report finds that PFAS &ldquo;pose a profound threat to human rights and the environment,&rdquo; compelling an &ldquo;immediate ban of all non-essential uses of PFAS.&rdquo; The report also recommends a phase-out of PFAS manufacturing and the development of an &ldquo;international legally binding instrument&rdquo; relating to the phase-out of PFAS, among other recommendations.</p> <h3>World Health Organization Identifies PFAS for Priority Assessment</h3> <p>In late July, the World Health Organization (WHO) released a report titled &ldquo;<a rel="noopener noreferrer" href="https://iris.who.int/server/api/core/bitstreams/549ad567-63a7-4f23-9e61-bca25444219b/content" target="_blank">Key Ingested Per- and Poly-fluoroalkyl Substances (PFAS) and Their Health Effects: Landscape Review</a>.&rdquo; The report notes the need to identify a &ldquo;subset of priority PFAS for in-depth assessment.&rdquo; In the report, WHO identified 18 priority PFAS for further evaluation to &ldquo;support the derivation of health-based values.&rdquo; The 18 priority PFAS are: perfluorooctanesulfonic acid (PFOS), perfluoroundecanoic acid (PFUnDA), perfluoroheptanoic acid (PFHpA), perfluorooctanoic acid (PFOA), perfluoroheptanesulfonic acid (PFHpS), perfluorobutanoic acid (PFBA), perfluorotridecanoic acid (PFTrDA), perfluorohexanoic acid (PFHxA), perfluorotetradecanoic acid (PFTeDA), perfluorobutanesulfonic acid (PFBS), perfluorohexanesulfonic acid (PFHxS), perfluoropentanoic acid (PFPeA), perfluorododecanoic acid (PFDoA), perfluorononanoic acid (PFNA), perfluorodecanoic acid (PFDA),perfluorodecanesulfonic acid (PFDS), trifluoroacetic acid (TFA) and perfluoro(2-propoxypropanoic acid) (HFPO-DA).&nbsp;</p> <p><span style="font-size: small;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{17B60053-582C-4E7B-A9FF-B10AB4CD6A4C}https://www.arnoldporter.com/en/perspectives/events/2026/10/eventBridget M. Weisshttps://www.arnoldporter.com/en/people/w/weiss-bridget-mbridget.weiss@arnoldporter.comSusan Kopfhttps://www.arnoldporter.com/en/people/k/kopf-susansusan.kopf@arnoldporter.comTwo years into the current administration, the most consequential federal action for hospitals and health systems isn&rsquo;t coming from Congress &mdash; it&rsquo;s coming from executive orders, agency guidance, rulemaking, and enforcement initiatives.Wed, 07 Oct 2026 00:00:00 -0500<p>Two years into the current administration, the most consequential federal action for hospitals and health systems isn't coming from Congress &mdash; it's coming from executive orders, agency guidance, rulemaking, and enforcement initiatives. Civil rights enforcement now reaches into medical education, clinical training, and day-to-day hospital operations. Federal funding conditions tied to gender-affirming care, an HHS Office for Civil Rights enforcement initiative, immigration enforcement inside health care facilities, and renewed scrutiny of charity care and tax-exempt status are all in play at once.</p> <p>Join Arnold &amp; Porter for a practical look at the issues to watch and what they mean for your institution.</p>{75989F76-540D-4FB9-A04C-D721BBE7FF9E}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/10/travis-annatoyn-weighs-in-on-presidential-authority-under-senate-permitting-bill-in-heatmapTravis Annatoyn, Arnold &amp; Porter Environmental counsel and former Deputy Solicitor for Energy and Mineral Resources at the U.S. Department of the Interior, was quoted in the <em>Heatmap </em>article, &ldquo;What a President Can and Can&rsquo;t Do Under the Senate Permitting Bill,&rdquo; which examines how the Bipartisan American Affordability and Jobs Act of 2026 would limit a president&rsquo;s ability to revoke or delay federal energy project approvals.Wed, 07 Oct 2026 00:00:00 -0500<p>Travis Annatoyn, Arnold &amp; Porter Environmental counsel and former Deputy Solicitor for Energy and Mineral Resources at the U.S. Department of the Interior, was quoted in the <em>Heatmap </em>article, &ldquo;What a President Can and Can&rsquo;t Do Under the Senate Permitting Bill,&rdquo; which examines how the Bipartisan American Affordability and Jobs Act of 2026 would limit a president&rsquo;s ability to revoke or delay federal energy project approvals.</p> <p>The article explains that the bill attempts to bar agencies from rescinding or altering permits for projects that have already obtained all required federal approvals, with limited exceptions, and would give developers a path to sue for discriminatory treatment or prolonged permitting delays. &ldquo;This bill is clearly looking backwards at five to 10 years of case studies in how an executive branch can delay or revoke permits, and it is targeted at those case studies,&rdquo; Travis said.</p> <p>Travis also noted that the bill would not eliminate the risk of executive interference. He noted that agencies &ldquo;can still inadvertently or deliberately choose to press on the limits of that prohibition, [&hellip;] test it or even violate it outright,&rdquo; and that developers would still bear the burden of a lengthy court challenge.</p> <p> <a href="https://heatmap.news/politics/baaja-executive-actions">Read the full article</a> (subscription required).</p>{250766B5-33FC-4C44-8849-64096A961C44}https://www.arnoldporter.com/en/perspectives/events/2026/10/states-of-play-the-state-ai-legislative-landscapeThomas A. Magnanihttps://www.arnoldporter.com/en/people/m/magnani-thomas-atom.magnani@arnoldporter.comBenjamin G. Danielihttps://www.arnoldporter.com/en/people/d/danieli-benjaminbenjamin.danieli@arnoldporter.comStyna Taohttps://www.arnoldporter.com/en/people/t/tao-stynastyna.tao@arnoldporter.comThis presentation will focus on those categories and will highlight regulated activities, enforcement mechanisms, and some best practices for compliance.Tue, 06 Oct 2026 00:00:00 -0500<p>This has been a dynamic year for companies developing and deploying artificial intelligence.</p> <p>Over the past year, states across the nation have enacted a wave of AI-specific laws creating a growing and uneven patchwork of obligations. With new requirements continuously phasing in and enforcement priorities still taking shape, staying up to date with recent legislation and regulation can prove challenging. Much of the new state-level legislation falls loosely into categories touching on, among other topics, chatbots, automated decision-making technology, frontier AI models, content provenance, and algorithmic pricing. This presentation will focus on those categories and will highlight regulated activities, enforcement mechanisms, and some best practices for compliance.</p> <p>You'll leave this session able to:</p> <ul> <li>Determine which laws apply to which companies, products, and services, and where obligations converge or diverge across states.</li> <li>Identify general compliance obligations &mdash; from disclosures and safety frameworks to human review and provenance labeling.</li> <li>Assess enforcement exposure &mdash; from private rights of action to AG-only enforcement, and the potential penalties for violations.</li> </ul>{52EAECC5-904B-4EC2-ABB2-2193BB0D9753}https://www.arnoldporter.com/en/perspectives/news/2026/10/arnold-porter-advises-volaris-group-on-acquisition-of-teknisaArnold &amp; Porter recently advised Volaris Group in its acquisition of Teknisa, a Brazilian provider of software solutions for corporate foodservice and food retail.Tue, 06 Oct 2026 00:00:00 -0500<p>Arnold &amp; Porter recently advised Volaris Group in its acquisition of Teknisa, a Brazilian provider of software solutions for corporate foodservice and food retail. Founded in Belo Horizonte in 1990, Teknisa serves more than 900 companies across Brazil, offering management solutions for corporate catering, school and hospital meals, and food retail operations. Volaris Group is an operating group of Constellation Software Inc., a Canadian-based company that acquires and develops technology companies serving vertical markets.</p> <p>The Arnold &amp; Porter team was led by Mergers &amp; Acquisitions partner Carlos Lobo.</p>{C4933482-B933-4242-B93C-5322AA591A4C}https://www.biosliceblog.com/2026/10/pseudonymised-not-anonymous-what-the-italian-garantes-e7-million-iqvia-fine-means-for-health-data/Alexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comCamille Vermosenhttps://www.arnoldporter.com/en/people/v/vermosen-camillecamille.vermosen@arnoldporter.comTue, 06 Oct 2026 00:00:00 -0500{4ACA3A14-B028-4DDD-B629-6ED611A0DAB1}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/10/soo-mi-rhee-discusses-national-security-implications-of-nippon-steels-us-steel-acquisition-with-ytnArnold &amp; Porter partner Soo-Mi Rhee recently appeared in a documentary produced by <em>YTN</em>, a national broadcaster in the Republic of Korea, to discuss increased national security scrutiny of foreign investment in U.S. companies. The documentary examined Nippon Steel Corporation&rsquo;s acquisition of U.S. Steel as an example of how governments assess the national security implications of foreign acquisitions.Mon, 05 Oct 2026 00:00:00 -0500<p>Arnold &amp; Porter partner Soo-Mi Rhee recently appeared in a documentary produced by <em>YTN</em>, a national broadcaster in the Republic of Korea, to discuss increased national security scrutiny of foreign investment in U.S. companies. The documentary examined Nippon Steel Corporation&rsquo;s acquisition of U.S. Steel as an example of how governments assess the national security implications of foreign acquisitions.</p> <p>&ldquo;From this transaction and the decision that was rendered by the U.S. government, it is apparent that the steel industry was deemed to be a foundational industry,&rdquo; Soo-Mi said. &ldquo;Not just for defense, but for other core industrial bases of the United States, like infrastructure and the auto industry.&rdquo;</p> <p>Soo-Mi explained that because of this designation, the acquisition included a &ldquo;golden share&rdquo; arrangement granting the U.S. government the right to appoint an independent director to U.S. Steel&rsquo;s board and consent rights over key governance matters, including decisions involving plant closures, labor, and sourcing outside the United States.</p> <p>She remarked that these requirements were designed to protect American interests, while also creating a framework for oversight and enforcement.</p> <p>&ldquo;CFIUS, led by the Department of the Treasury and its associated agencies, monitors and enforces the mitigation agreements,&rdquo; she said. &ldquo;Noncompliance with CFIUS mitigation measures carries very serious consequences and penalties, even up to the transaction value.&rdquo;</p> <p><a href="https://www.youtube.com/watch?v=xCTgSyjy5EY&amp;t=1s">Watch the full interview</a>.</p>{97291355-03DA-48B8-9CD2-6A2915C3ECA1}https://www.arnoldporter.com/en/perspectives/advisories/2026/10/us-and-colombia-sign-arrangements-on-critical-minerals-and-civil-nuclear-cooperationGregory Harringtonhttps://www.arnoldporter.com/en/people/h/harrington-gregorygregory.harrington@arnoldporter.comRaul R. Herrerahttps://www.arnoldporter.com/en/people/h/herrera-raul-rRaul.Herrera@arnoldporter.comCarlos Lobohttps://www.arnoldporter.com/en/people/l/lobo-carloscarlos.lobo@arnoldporter.comMateo Morris Lievanohttps://www.arnoldporter.com/en/people/m/morris-mateoMateo.Morris@arnoldporter.comThe United States and Colombia signed two bilateral arrangements on September 8, 2026, establishing frameworks for cooperation on critical minerals and civil nuclear energy. Known as the Barranquilla Agreements, they aim to strengthen supply chains, support investment in critical minerals and rare earth projects, and advance collaboration on nuclear technologies, workforce development, regulatory capacity, and non-power applications such as medicine and agriculture. The arrangements could create opportunities for companies in mining, energy, infrastructure, and related sectors while supporting Colombia&rsquo;s broader economic recovery and investment agenda, although additional negotiations may be needed to implement specific initiatives.Mon, 05 Oct 2026 00:00:00 -0500<p>On September 8, 2026, U.S. Secretary of State Marco Rubio and Colombian Foreign Minister Omar Bula signed two bilateral arrangements aimed at strengthening cooperation in the areas of critical minerals and civil nuclear energy. The two memoranda of understanding, referred to as Barranquilla Agreements, seek to deepen economic ties between the two countries, enhance supply chain resilience, and promote investment and technological collaboration.</p> <p>The Critical Minerals Framework establishes a platform for cooperation in the development, processing, and financing of critical minerals and rare earth projects. The arrangement contemplates the use of financing instruments, investment support mechanisms, and regulatory cooperation to advance strategic mining projects and strengthen regional supply chains.</p> <p>The Memorandum of Understanding on Civil Nuclear Cooperation creates a framework for collaboration on civil nuclear technologies, workforce development, regulatory and institutional capacity-building, scientific exchanges, and the evaluation of advanced technologies, including Small Modular Reactors (SMRs). The arrangement also covers non-power applications, such as nuclear medicine and agricultural uses.</p> <p>Companies in the mining, energy and infrastructure sectors should monitor developments closely, as the arrangements may create new investment and business opportunities in Colombia and throughout the region, such as critical minerals exploration and processing projects, energy generation and transmission infrastructure, transportation and logistics networks supporting resource development, advanced energy technologies, nuclear medicine initiatives, agricultural technology applications, and related supply chain and engineering services.</p> <p>Secretary Rubio described the agreements as an extraordinary opportunity to generate prosperity for both the United States and Colombia. The arrangements were signed as part of the Colombian government&rsquo;s broader efforts to promote economic recovery following the earthquake that struck the country in August, while also advancing the new Colombian administration&rsquo;s broader economic and policy agenda for 2026-2030. President Abelardo De La Espriella has announced a government program focused on strengthening security, restoring the healthcare system, promoting investment and job creation, expanding agricultural productivity, and revitalizing the country&rsquo;s energy and mining sectors. The administration has also emphasized attracting foreign investment and enhancing Colombia&rsquo;s competitiveness as part of its long-term growth strategy.</p> <p>Given their potential to reshape economic cooperation between the two countries, the Barranquilla Agreements have already drawn comparisons to Plan Colombia, under which the United States and Colombia partnered to combat drug trafficking and strengthen bilateral cooperation.</p> <p>It is important to note that the arrangements primarily establish a framework for future cooperation, and additional negotiations may be required to implement specific initiatives.</p> <p>For more information, please contact a member of our <a href="https://www.arnoldporter.com/en/services/capabilities/regions/latin-america" target="_self">Latin America</a> team.</p> <p><em>*Levi Cust&oacute;dio Santos contributed to this Advisory. Levi is employed as a foreign attorney in Arnold &amp; Porter&rsquo;s New York office.</em></p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{232BAD52-B1CE-4880-A893-596936064BA2}https://www.arnoldporter.com/en/perspectives/advisories/2026/10/washingtons-noncompete-ban-a-practical-guide-to-auditingStephanie Wright Picketthttps://www.arnoldporter.com/en/people/p/pickett-stephanie-wrightstephanie.pickett@arnoldporter.comPatrick M. Maddenhttps://www.arnoldporter.com/en/people/m/madden-patrick-mpatrick.madden@arnoldporter.comIn March 2026, Washington&rsquo;s Governor signed into law a sweeping bill, House Bill 1155, that will transform the competitive landscape for Washington-based employees and independent contractors.&nbsp;Mon, 05 Oct 2026 00:00:00 -0500<h2><em><span style="font-size: 18px;">Key Takeaways</span></em></h2> <ul> <li><em><span style="font-size: 13px;">Effective June 30, 2027, virtually all Washington noncompetes become void, including most existing agreements</span></em></li> <li><em><span style="font-size: 13px;">The statute reaches far beyond traditional noncompetes and may affect equity, bonus, relocation, repayment, and clawback provisions</span></em></li> <li><em><span style="font-size: 13px;">Employers must provide notice to affected current and former workers by October 1, 2027</span></em></li> <li><em><span style="font-size: 13px;">Violations may result in statutory penalties of $5,000 per violation plus attorneys&rsquo; fees</span></em></li> <li><em><span style="font-size: 13px;">Employers should begin reviewing and modifying standard forms now</span></em></li> </ul> <p>In March 2026, Washington&rsquo;s Governor signed into law a sweeping bill, House Bill 1155, that will transform the competitive landscape for Washington-based employees and independent contractors. Effective June 30, 2027, HB 1155 renders virtually all noncompetition agreements void and unenforceable, regardless of when those agreements were signed, the employee&rsquo;s or contractor&rsquo;s compensation level, or the agreement&rsquo;s duration. Washington now joins a small but growing group of states &mdash; including California, Minnesota, North Dakota, and Oklahoma &mdash; that have enacted near-complete bans on noncompetition covenants.</p> <p>The headline prohibition is significant. For many employers, however, the more consequential development is what the law defines as a &ldquo;noncompetition covenant.&rdquo; That definition extends well beyond traditional noncompete clauses and will require employers to scrutinize a wide range of documents that they may not immediately associate with noncompetition restrictions &mdash; including offer letters, incentive plans, equity agreements, relocation packages, forgivable loans, separation agreements, and any related policies.</p> <p>Employers must not wait for the June 30, 2027, effective date to begin this work. The law imposes a separate, affirmative notice obligation with an October 1, 2027, deadline, and the drafting and review process required to achieve compliance will take time. If employers start addressing these issues now, they will open up structural options for reworking noncompliant arrangements that may be foreclosed if they delay.</p> <h2>I. The Litigation Landscape: Why This Matters Now</h2> <p>Washington&rsquo;s new law does not arise in a vacuum. Over the past several years, noncompete-related class action litigation has proliferated at both the state and federal levels, and the trend has increasingly targeted provisions that do not look like traditional noncompete agreements on their face.&nbsp;</p> <p>For example, HB 1155 did not change Washington&rsquo;s existing prohibition on moonlighting restrictions, RCW 49.62.070, which bars employers from restricting employees earning less than twice the state minimum wage from holding a second job. What has changed is the enforcement climate around it. Following the Washington Supreme Court&rsquo;s 2025 decision in <em>David v. Freedom Vans LLC</em>, which held that moonlighting restrictions must be reasonable and narrowly tailored, plaintiffs&rsquo; counsel have filed a wave of class actions targeting conflict of interest policies, duty-of-loyalty clauses, and outside employment provisions as unlawful moonlighting restrictions. These actions seek a standard statutory penalty of $5,000 and do not require proof of actual damages. To avoid the risk of such draconian penalties, employers should ensure that any such policies are narrowly scoped and do not sweep more broadly than the duty of loyalty permits.</p> <h2>II. The Core Prohibition and Notice Requirement</h2> <p>Effective June 30, 2027, employers may not:</p> <ul> <li>Enter into a noncompetition covenant with a Washington-based employee or independent contractor;</li> <li>Enforce, attempt to enforce, or threaten to enforce any noncompetition covenant, including agreements signed years before the June 30, 2027, effective date; or</li> <li>Represent to a worker that they are bound by a noncompetition covenant.</li> </ul> <p>The prohibition applies retroactively. This means that all existing noncompetition agreements, whenever signed, become void and unenforceable on June 30, 2027, as to any proceeding commenced on or after that date. Agreements subject to litigation filed before June 30, 2027, remain governed by existing law.</p> <p>In addition to the substantive prohibition, by October 1, 2027, employers must make reasonable efforts to provide written notice to all current and former employees and independent contractors whose noncompetition covenants would otherwise still be in effect, informing them that those covenants are void and unenforceable. The law does not define &ldquo;reasonable efforts&rdquo;; however, at a minimum, employers should use traceable delivery methods &mdash; such as certified mail, registered email, or electronic signature platforms &mdash; and document all outreach efforts.&nbsp;</p> <p>Any violation of the law, including entering into an unlawful noncompetition covenant, failing to provide timely notice, or continuing to represent that a worker is bound by a void covenant, exposes employers to the greater of actual damages or a statutory penalty of $5,000 per violation, plus attorneys&rsquo; fees and costs. The $5,000 penalty also applies if a court enters an order modifying an agreement to make it compliant with the law.</p> <p>Exceptions are narrow. The law preserves the following as lawful: nonsolicitation covenants that fit statutory exceptions; confidentiality agreements; covenants prohibiting use or disclosure of trade secrets or inventions; covenants entered in connection with the sale of goodwill or other business interest if the individual signing holds at least a 1% ownership interest; certain franchise agreements; written agreements to repay out-of-pocket educational expenses; and a tribal exception. Consistent with the Washington Supreme Court&rsquo;s approach in <em>Freedom Vans</em>, the statute requires that employee protections be liberally construed and exceptions narrowly construed. Employers should also be aware that courts retain the authority to apply a common law reasonableness test to invalidate noncompetition covenants on grounds independent of the statute &mdash; a point the Attorney General has expressly confirmed. Agreements that might appear to fall within a statutory exception could still be challenged on reasonableness grounds.</p> <h2>III. The Expanded Definition of &ldquo;Noncompetition Covenant&rdquo;: Where Employers Must Focus</h2> <p>The law&rsquo;s prohibition is expansive, covering agreements not traditionally considered noncompetes. HB 1155 defines &ldquo;noncompetition covenant&rdquo; broadly to reach any written or oral provision that:</p> <ol> <li>Prohibits or restrains an employee or independent contractor from engaging in a lawful profession, trade, or business;</li> <li>Prohibits the acceptance or transaction of business with a customer (sometimes called &ldquo;no-accept&rdquo; provisions); or<br /> <span></span></li> <li><span></span>&ldquo;[T]hreatens, demands, requires, or otherwise effectuates that an individual return, repay, or forfeit any right, benefit, or compensation, as a consequence of the individual engaging in a lawful profession, trade, or business of any kind.&rdquo; RCW 49.62.010(3)(d).</li> </ol> <p>The third category is the most expansive and the most likely to catch employers off guard. Under this definition, the operative question is whether the provision functions as a penalty on post-employment competition. If it does, the provision is a prohibited noncompetition covenant. Employers can assert that any such requirement to return or repay would operate regardless of the reason for separation and not as &ldquo;a consequence of engaging in a lawful profession, trade, or business.&rdquo; For example, an employee who retires or quits to pursue a gap year often would not satisfy requirements to retain a signing bonus that had been advanced and conditioned on remaining employed for a certain period. They are thus not losing the incentive based on engaging in another profession, trade, or business but, instead, because they did not meet the time requirements. While this type of departure does not seem to be the focus of the law, the vague wording creates some risk and will likely generate claims from plaintiffs&rsquo; counsel testing the statute&rsquo;s outer boundaries.&nbsp;</p> <p>In contrast, clawback provisions, forfeiture-for-competition clauses in incentive or equity plans, repayment obligations triggered by a competitive departure, and similar arrangements are all directly within the statute&rsquo;s reach. Unlike other states that have enacted similar laws, including California&rsquo;s new law regarding repayment obligations (Cal. Bus. &amp; Prof. Code &sect; 16608, AB 692) that allows repayment obligations entered into before the law&rsquo;s January 1, 2026, effective date to remain enforceable, Washington&rsquo;s law is retroactive. Note that New York&rsquo;s similar law &mdash; the Trapped at Work Act, as amended, effective December 19, 2026 &mdash; restricts employment promissory notes and stay-or-pay provisions prospectively and does not expressly apply retroactively, though the absence of a grandfathering clause creates some uncertainty about agreements still in effect after the effective date.&nbsp;</p> <h2>IV. Practical Steps: What Employers Should Be Doing Now</h2> <p>The June 30, 2027, effective date may seem distant, but savvy employers will begin developing a compliance plan now. Some compliance steps require significant lead time and beginning now will preserve strategic options that will be unavailable to employers who wait. Moreover, employers with operations in multiple states should also treat HB 1155 as an occasion to audit their restrictive covenant programs on a jurisdiction-by-jurisdiction basis. Joining longstanding bans in California, North Dakota, and Oklahoma, a growing number of states &mdash; including Colorado, Illinois, Maine, Maryland, Minnesota, Oregon, and Virginia &mdash; have enacted noncompete restrictions in recent years, each with varying salary thresholds, notice requirements, and scope limitations. A template revised for Washington compliance may still fall short in these and other states. Multi-state employers should confirm that their agreements satisfy each state&rsquo;s requirements &mdash; a task that reinforces the case for beginning this review sooner rather than later. Employers should also consider employees who work in Washington part of the time or who transfer into the state, as HB 1155 applies to Washington-based workers and an employee&rsquo;s status as such may not always be obvious. Agreements with workers whose roles have any Washington nexus should be reviewed with that question in mind. Given the number of interpretive questions HB 1155 leaves open, employers should also monitor the Washington&nbsp;Attorney General&rsquo;s <a rel="noopener noreferrer" href="atg.wa.gov/labor-and-antitrust" target="_blank">noncompete guidance page</a>, where the Attorney General has signaled active enforcement intentions and where further guidance is likely before the June 30, 2027, effective date.</p> <p><strong>1. Conduct a comprehensive agreement audit</strong>. The most immediate task is to identify all existing and template documents containing provisions that qualify as noncompetition covenants under the expanded HB 1155 definition. This review should encompass employment agreements, offer letters, employee handbooks and policies, sign-on and retention bonus agreements, relocation and forgivable loan arrangements, incentive compensation (bonus and commission) plans, deferred compensation arrangements, equity plan documents and award agreements, separation agreements, and any other document that conditions rights, compensation, or benefits on post-employment conduct. The audit should also extend to operational documents that are not agreements per se &mdash; including offboarding scripts, exit interview templates, and any standard communications used during hiring or separation &mdash; to confirm that none of them represent an employee as still bound by a noncompetition covenant. Under HB 1155, that representation alone is a violation. Some specific categories to keep in mind:</p> <ul> <li><strong>Offer letters and sign-on bonus agreements</strong>. Repayment provisions triggered specifically by an employee&rsquo;s decision to work for a competitor are squarely within the new definition. Further, any type of signing bonus paid as an advance with a repayment obligation &mdash; even if not conditioned on working for a competitor &mdash; may be subject to attack by plaintiffs&rsquo; lawyers pushing to expand the boundaries of the law. Restructuring bonuses to pay employees in installments over time or upon certain milestones can avoid repayment obligations that may arguably violate the law. Because sign-on bonus repayment provisions are often targeted over one or more years, employers need to address this now and not provide advance payments that are conditioned on remaining employed on June 30, 2027, or later.&nbsp;</li> <li><strong>Relocation expense repayment agreements and forgivable loans</strong>. Arrangements requiring repayment of relocation costs or the outstanding balance of a forgivable loan, where the repayment obligation is triggered by or conditioned on competitive activity, are at risk under HB 1155.&nbsp;</li> <li><strong>Educational expense repayment arrangements</strong>. Employers who pay out-of-pocket educational expenses for employees conditioned on continued employment can continue to recover these expenses if the agreement: (1) expires within 18 months of the employee&rsquo;s start date; (2) limits repayment to the pro rata portion of the remaining time of the 18-month period; and (3) releases the employee from the obligation to repay if the employee&rsquo;s separation is based on &ldquo;good cause&rdquo; under RCW 50.20.050 (an employee-friendly definition used for unemployment eligibility). Employers should construe this exception narrowly and not attempt to pull in other expense advances, such as for relocation or estimated costs of on-the-job training.&nbsp;</li> <li><strong>Incentive compensation plans</strong>. Forfeiture-for-competition provisions and clawback clauses requiring repayment of previously paid bonuses as a consequence of competitive conduct are directly within the statute&rsquo;s definition of a prohibited noncompetition covenant. Both plan documents and individual award agreements should be reviewed. Many incentive plans provide for advanced payments subject to later reconciliation before the incentives are earned. Obligations to repay the advances, like sign-on bonuses, should be carefully reviewed to ensure statutory compliance.</li> <li><strong>Equity plans and award agreements</strong>. Provisions that accelerate the forfeiture of unvested equity or require disgorgement of gains from vested awards upon competitive activity carry significant risk under the new law. The relevant provisions may appear in the plan document, the form of award agreement, or both.</li> <li><strong>Separation agreements and releases of claims</strong>. Severance payments or other consideration offered in exchange for a release of claims that includes a requirement not to compete or to follow an overly broad nonsolicitation covenant will constitute prohibited noncompetition covenants effective June 30, 2027. Employers should also evaluate whether separation agreements condition benefits on post-employment conduct in ways that could be characterized as a deterrent to competition.</li> </ul> <p>One practical note that may provide some reassurance to employers is that if an existing agreement contains a void noncompetition covenant, that does not necessarily render the rest of the agreement unenforceable. Courts will typically enforce the remainder of the agreement even where a particular provision is void; however, employers should not rely on this as a reason to delay remediation, as a void provision still exposes the employer to the $5,000 statutory penalty and fees regardless of whether enforcement is ever attempted.</p> <p><strong>2. Draft new agreements now, building in the June 30, 2027, effective date</strong>. Employers understandably may want to leave in place noncompetition covenants that comply with current Washington law through the June 30, 2027, effective date. Relevant considerations differ for current employees and those hired after the employer has developed its compliance plan.</p> <p><em>Current employees</em>: Before the effective date, employers should consider whether to require current employees to sign new, HB 1155-compliant forms or instead just provide them notice before the October 1, 2027, deadline that certain provisions are no longer enforceable. As HB 1155 modifies and slightly expands the scope of permissible nonsolicitation covenants, employers with concerns about solicitation may want new agreements, keeping in mind that some consideration beyond continuing employment will be required. Planning early will provide employers with more flexibility to assess appropriate consideration, which may include cash, a pay raise, a promotion, eligibility for a new incentive, equity, or some other item to which the employee is not entitled.&nbsp;</p> <p><em>New employees</em>: The law&rsquo;s effective date is less than a year away, and employers should consider giving all new employees agreements that comply with HB 1155 now for simplicity. For employers not yet ready to make that change, an alternative for employees hired between now and June 29, 2027, is to use a form expressly contemplating the change: complying with current law and providing that it shifts to HB 1155-compliant terms effective June 30, 2027, with that date of change expressly named. Naming that date expressly, rather than stating the agreement will be modified to comply with applicable law, provides clarity for employees and reduces the risk of disputed enforceability during the transition period. Because the employee will have received an HB 1155-compliant agreement before the effective date &mdash; and will not be relying on a void covenant when the law takes effect &mdash; employers who act now can avoid the need to provide new consideration, enter into replacement agreements, or send notice to those employees by October 1, 2027.&nbsp;</p> <p><strong>3. Restructure incentives where possible</strong>. Rather than simply deleting provisions, employers should evaluate whether their underlying business objectives can be achieved through compliant structures. For example:</p> <ul> <li><strong>Convert advances to earned compensation</strong>. Sign-on bonuses or other payments characterized as advances subject to repayment if the employee competes can often be restructured as compensation earned over time. Paying a bonus ratably over a vesting period, rather than upfront with a condition to earn the payment, eliminates the repayment trigger entirely. Employers offering new hires incentives now should consider either having them terminate effective June 30, 2027, or revamping them to pay over time.&nbsp;</li> <li><strong>Redesign retention arrangements</strong>. Forgivable loans and similar retention devices can be restructured so that the repayment obligation is triggered by departure for any reason &mdash; not competitive activity specifically &mdash; with the obligation declining ratably over time. But this is not without risk, and while there is a strong argument that the obligation is simply time-based and not related to competition, this is the type of test case plaintiffs&rsquo; counsel may pursue. Thus, employers should think carefully about whether they want to be that test case. And note that for any existing arrangements, employers cannot simply restructure them to change the payment schedule without implicating 409A of the Internal Revenue Code, which imposes limits on changing the timing of existing arrangements.</li> <li><strong>Rely on vesting schedules rather than forfeiture provisions</strong>. Rather than granting equity subject to forfeiture upon competitive activity, employers can rely on time- or performance-based vesting schedules that reduce or eliminate unvested equity at departure without conditioning the forfeiture on post-employment conduct.</li> </ul> <p><strong>4. Evaluate remaining protective tools</strong>. Nonsolicitation, confidentiality, and invention and trade secret-related agreements remain permissible under HB 1155 but must be drafted carefully. For example, to avoid being an unlawful noncompetition covenant, nonsolicitation agreements must be limited to solicitation of current or prospective customers, patients, or clients of the employer with whom the employee established or substantially developed a direct relationship through work and must be capped at 18 months post-termination. Nonsolicitation agreements may not directly or indirectly prohibit accepting or transacting business with a customer, patient, or client absent improper solicitation. Confidentiality agreements must be tailored to avoid sweeping so broadly as to function as de facto noncompetes &mdash; for example, by purporting to restrict knowledge or skills the employee developed through general experience, or information that is publicly available. Beyond the agreements themselves, employers should treat the sunset of noncompete protection as a prompt to revisit how sensitive information is managed: limiting employee access to confidential data on a need-to-know basis, implementing appropriate technical controls on systems and files, and conducting thorough offboarding procedures &mdash; including confirming return or deletion of proprietary materials &mdash; will become a primary line of defense where contractual restrictions no longer exist.</p> <p><strong>5. Begin planning the October 1, 2027, notice process</strong>. Employers should start identifying the population of current and former employees and contractors who will be subject to the written notice requirement, locating contact information, and developing a communication strategy. Employers will want to ensure the method chosen will suffice as &ldquo;reasonable efforts&rdquo; to provide notice and should assess what records to retain to demonstrate compliance. Although October 1, 2027, is the statutory deadline, employers should consider providing notice shortly after the June 30, 2027, effective date rather than waiting until the fall. Workers who are not promptly notified may file preemptive suits seeking a declaration that their agreements are void &mdash; and because any violation gives rise to the greater of actual damages or a $5,000 statutory penalty plus fees, the window between the effective date and the notice deadline is a period of meaningful litigation exposure.</p> <p><strong>6. Train human resources (HR) and recruiting teams</strong>. The prohibition extends to attempting to enter into a noncompetition covenant and to representing that an employee is subject to one. HR personnel and recruiters involved in hiring, onboarding, and offboarding should be trained on and understand what HB 1155 covers well in advance of the effective date. New hires are typically extended offers well in advance of their start date, so training and compliance cannot wait until the June 30, 2027, deadline.&nbsp;</p> <p><strong>7. Evaluate time-sensitive noncompete enforcement decisions</strong>. While the new law is retroactive, the one exception is for actions commenced before June 30, 2027. Those actions will be subject to the law in effect before HB 1155. While courts will likely be reluctant to enforce in edge cases, if there are significant violations, employers should file their claim before June 30 so the current, pre-HB 1155 law applies.</p> <p><strong>8. Assess whether to implement individual arbitration agreements</strong>. Although a $5,000 penalty may not seem daunting on an individual level, this area is ripe for class action litigation, as a simple wording violation &mdash; even in the absence of an attempt to enforce &mdash; gives rise to a violation and award of the greater of actual damages or a $5,000 statutory penalty. Plaintiffs&rsquo; counsel are recruiting potential clients and have already brought hundreds of class actions under the current law, and HB 1155&rsquo;s expansive wording will give rise to many more claims for unprepared employers. One way of minimizing such class action risks is to implement a dispute resolution program that includes individual arbitration agreements. The Federal Arbitration Act allows employers to enter into arbitration agreements with employees that push claims out of court and into arbitration, and these agreements can require individual &mdash; not class &mdash; determinations. This does not eliminate an employer&rsquo;s obligation to comply with HB 1155, but it can help make an employer a less attractive target to plaintiffs&rsquo; counsel.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{75C50CDA-84B7-49E4-A7AB-DA874661D613}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/10/jonathan-martel-assesses-the-impact-of-nhtsas-fuel-economy-rule-in-law360Jonathan Martel, co-chair of Arnold &amp; Porter&rsquo;s Environmental practice group, was quoted in the recent <em>Law360</em> article, &ldquo;NHTSA Fuel Economy Regs Overhaul Crushes EV Ambitions,&rdquo; which examines the National Highway Traffic Safety Administration&rsquo;s (NHTSA) final rule revising the corporate average fuel economy (CAFE) standards for passenger cars and light trucks.Fri, 02 Oct 2026 00:00:00 -0500<p>Jonathan Martel, co-chair of Arnold &amp; Porter&rsquo;s Environmental practice group, was quoted in the recent <em>Law360 </em>article, &ldquo;NHTSA Fuel Economy Regs Overhaul Crushes EV Ambitions,&rdquo; which examines the National Highway Traffic Safety Administration&rsquo;s (NHTSA) final rule revising the corporate average fuel economy (CAFE) standards for passenger cars and light trucks.</p> <p>The rule sets a 2031 fleetwide fuel efficiency target, and the article outlines that legal challenges from environmental groups are expected. Jonathan discussed the context for the changes, noting that the prior administration's standards were demanding. &ldquo;The [fuel economy] rules the Biden administration adopted were very stringent, and there was always a need, based on various circumstances, for some course correction,&rdquo; he said.</p> <p>Jonathan also addressed what the new standards mean in practice. Congress has already eliminated the civil penalties automakers previously faced for missing CAFE targets, which raises the question of how much the revised standards will matter. &ldquo;With those being zeroed out, the question is what difference does this make?&rdquo; he said.</p> <p><a rel="noopener noreferrer" href="https://www.law360.com/articles/2530774/nhtsa-fuel-economy-regs-overhaul-crushes-ev-ambitions" target="_blank">Read the full article</a> (subscription required).</p>{FFC92855-B59E-4AC5-8074-C129AA77E91F}https://www.arnoldporter.com/en/perspectives/news/2026/10/the-legal-500-uk-2027-recognizes-15-arnold-porter-practices-10-lawyersThe 2027 edition of <em>The Legal 500 United Kingdom</em> recognized 15 Arnold &amp; Porter practices for their standout contributions to their respective practices.Thu, 01 Oct 2026 00:00:00 -0500<p>The 2027 edition of <em>The Legal 500 United Kingdom</em> recognized 15 Arnold &amp; Porter practices for their standout contributions to their respective practices.</p> <p>The guide also included 29 Arnold &amp; Porter lawyers in their mentions and named five lawyers as elite &ldquo;Leading Partners,&rdquo; two lawyers as &ldquo;Next Generation Partners,&rdquo; one lawyer as a &ldquo;Leading Associate&rdquo; in their guide to up-and-coming lawyers, and two lawyers to the &ldquo;Hall of Fame.&rdquo; <em>The Legal 500&rsquo;s</em> &ldquo;Hall of Fame&rdquo; is a recognition that is achieved when lawyers are &ldquo;widely regarded as being at the very top of the profession&rdquo; and &ldquo;have been consistently ranked as leading individuals by <em>The Legal 500 </em>for a number of years.&rdquo;</p> <p><em>The Legal 500</em> highlighted Arnold &amp; Porter&rsquo;s &ldquo;transatlantic capabilities to advise multinational companies on multijurisdictional investigations and prosecutions.&rdquo; The guide also praised the firm for its &ldquo;real breadth and depth of experience&rdquo; and for delivering &ldquo;a seamless combination of top-tier legal analysis, strategic thinking, and client service.&rdquo;</p> <p>Arnold &amp; Porter was recommended in the following practice areas:</p> <ul> <li>Bank Lending: Investment Grade Debt and Syndicated Loans</li> <li>Commercial Litigation: Premium</li> <li>Competition Litigation</li> <li>Debt Capital Markets</li> <li>Employers</li> <li>EU and Competition</li> <li>Fraud: White-Collar Crime (Advice to Individuals)</li> <li>Hedge Funds</li> <li>Intellectual Property: Patents (Contentious and Non-contentious)</li> <li>Intellectual Property: Trademarks, Copyright and Design</li> <li>International Arbitration</li> <li>Life Sciences and Healthcare</li> <li>Product Liability: Defendant</li> <li>Public International Law</li> <li>Regulatory Investigations and Corporate Crime (Advice to Corporates)</li> </ul> <p>The following lawyers were ranked as &ldquo;Leading Partners&rdquo;:</p> <ul> <li>Sean Curran&mdash;Fraud: White-Collar Crime (Advice to Individuals); Regulatory Investigations &amp; Corporate Crime (Advice to Corporates)</li> <li>Simon Firth&mdash;Hedge Funds</li> <li>Kathleen Harris&mdash;Fraud: White-Collar Crime (Advice to Individuals); Regulatory Investigations &amp; Corporate Crime (Advice to Corporates)</li> <li>Patricio Gran&eacute; Labat&mdash;Public International Law</li> <li>Jeremy Willcocks&mdash;Debt Capital Markets</li> </ul> <p>The following lawyers were ranked as &ldquo;Next Generation Partners&rdquo;:</p> <ul> <li>Libby Amos-Stone&mdash;Life Sciences and Healthcare</li> <li>&Aacute;lvaro Nistal&mdash;International Arbitration; Public International Law</li> </ul> <p>The following lawyer was ranked as a &ldquo;Leading Associate&rdquo;:</p> <ul> <li>Eleri Abreo&mdash;Life Sciences and Healthcare</li> </ul> <p>The following lawyers were recognized in the &ldquo;Hall of Fame&rdquo;:</p> <ul> <li>David Reed&mdash;International Arbitration</li> <li>Adela Williams&mdash;Life Sciences &amp; Healthcare; Product Liability: Defendant</li> </ul>{8F118DEB-2EF4-4AEA-80C4-402AA40D5F9D}https://www.biosliceblog.com/2026/10/virtual-and-digital-health-digest-september-2026/Alexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comFabien Royhttps://www.arnoldporter.com/en/people/r/roy-fabienfabien.roy@arnoldporter.comJames Castro-Edwardshttps://www.arnoldporter.com/en/people/c/castro-edwards-jamesjames.castro-edwards@arnoldporter.comSofia Holmquisthttps://www.arnoldporter.com/en/people/h/holmquist-sofiasofia.holmquist@arnoldporter.comThu, 01 Oct 2026 00:00:00 -0500{02E14FA6-9591-4FBD-A6BF-48D71FFFDEB1}https://www.arnoldporter.com/en/perspectives/news/2026/09/arnold-porter-obtains-victory-for-the-republic-of-koreaArnold &amp; Porter has secured a victory for the Republic of Korea in a second investment treaty arbitration brought by six Iranian investors, members of the Dayyani family. In an award dated September 28, 2026, the arbitral tribunal dismissed all of the Claimants&rsquo; claims on the merits and awarded Korea 75% of its legal and expert costs, as well as its full share of the administrative costs of the arbitration. The Claimants had initially sought damages of approximately US $1 billion, but later reduced their claim to roughly US $555 million.Wed, 30 Sep 2026 00:00:00 -0500<p>Arnold &amp; Porter has secured a victory for the Republic of Korea in a second investment treaty arbitration brought by six Iranian investors, members of the Dayyani family. In an award dated September 28, 2026, the arbitral tribunal dismissed all of the Claimants&rsquo; claims on the merits and awarded Korea 75% of its legal and expert costs, as well as its full share of the administrative costs of the arbitration. The Claimants had initially sought damages of approximately US $1 billion, but later reduced their claim to roughly US $555 million.</p> <p>The arbitration arose from the Claimants&rsquo; allegations that Korea had violated the bilateral investment treaty between Korea and Iran by allegedly delaying payment of, and failing to pay in full, an award rendered in an earlier arbitration between the parties under that same treaty. The Claimants alleged breaches of the treaty&rsquo;s fair and equitable treatment and free-transfer provisions, as well as its provisions concerning the final and binding status of arbitral awards issued pursuant to the treaty.</p> <p>The dispute concerned Korea&rsquo;s efforts to pay the earlier award while addressing the application of U.S. sanctions against Iran, Korea&rsquo;s challenge to the earlier award before the English courts, and attachment and collection orders issued by Korean courts in proceedings brought by a third-party creditor against one of the Claimants. The tribunal unanimously rejected all of the Claimants&rsquo; claims on the merits, upholding Korea&rsquo;s position that it had acted reasonably and did not breach the treaty.</p> <p>Arnold &amp; Porter partner Anton A. Ware, who acted as lead counsel for Korea in the arbitration, commented: &ldquo;The Tribunal&rsquo;s Award not only vindicates Korea&rsquo;s good-faith compliance with its international obligations, but also clarifies important issues involving the interplay of investment treaty protections, award compliance, and third-country sanctions regimes, with implications far beyond this case. We are honored to have helped to achieve this important victory for Korea.&rdquo;</p> <p>The arbitration was conducted under the 1976 UNCITRAL Arbitration Rules and administered by the Permanent Court of Arbitration as PCA Case No. 2022-12, <em>Mohammad Reza Dayyani, Abbas Dayyani, Mohammad Hossein Dayyani, Ali Dayyani, Fatemeh Dayyani and Kosar Dayyani v. Republic of Korea</em>. The tribunal was composed of presiding arbitrator Professor Albert Jan van den Berg, Dr. Michael W. B&uuml;hler, and Professor John R. Crook.</p> <p>The Arnold &amp; Porter team was led by partners Jun Hee Kim and Anton A. Ware, senior counsel Paolo Di Rosa, senior associates Bart Wasiak and Tereza Gao, and associates Dianne Lake, Peter J.C. Saban, Grace Yang, and Lyuzhi Wang. Korea was jointly represented by Arnold &amp; Porter and Peter &amp; Kim.</p>{7079D6A6-77A3-4D80-8723-14332071273E}https://www.arnoldporter.com/en/perspectives/advisories/2026/09/measuring-damages-in-avoidance-actions-that-target-cryptocurrency-transfersBenjamin Mintzhttps://www.arnoldporter.com/en/people/m/mintz-benjaminbenjamin.mintz@arnoldporter.comJustin Imperatohttps://www.arnoldporter.com/en/people/i/imperato-justinjustin.imperato@arnoldporter.comCelsius Network, LLC operated as a cryptocurrency lending and yield platform. At its peak, Celsius had roughly 1.7 million customers and nearly $12 billion in assets under management. In June 2022, however, Celsius froze withdrawals, and by July 2022, Celsius and its affiliates filed voluntary petitions for relief in the Bankruptcy Court for the Southern District of New York (the Court) under Chapter 11 of the Bankruptcy Code.Wed, 30 Sep 2026 00:00:00 -0500<p>Celsius Network, LLC operated as a cryptocurrency lending and yield platform. At its peak, Celsius had roughly 1.7 million customers and nearly $12 billion in assets under management. In June 2022, however, Celsius froze withdrawals, and by July 2022, Celsius and its affiliates filed voluntary petitions for relief in the Bankruptcy Court for the Southern District of New York (the Court) under Chapter 11 of the Bankruptcy Code. After the Court confirmed the Celsius Chapter 11 plan, Mohsin Y. Meghji, as the litigation administrator for the Celsius post-confirmation estate (the Litigation Administrator), commenced thousands of avoidance actions against former Celsius customers to recover preferential transfers made in the 90 days before the bankruptcy petition date. </p> <p>These customer preference cases raised certain threshold legal questions, including: (1) if the Litigation Administrator avoids a transfer as preferential under the Bankruptcy Code, whether he may recover the transferred cryptocurrency itself or, alternatively, its cash value; and (2) if the Litigation Administrator is entitled to recover the cash value of the transferred cryptocurrency, what value should be ascribed to those digital assets if they have appreciated or depreciated since the transfer date. The answers to those questions matter enormously. Crypto markets are volatile, and many customers withdrew digital assets from Celsius, including Bitcoin, Ethereum, and Celsius&rsquo; own CEL Token, in the 90 days before the company&rsquo;s collapse in 2022. Some of those coins are worth dramatically more today; others, like CEL Token, are worth a small fraction of their original value. Depending on which valuation date and which asset (the coin itself, its sale proceeds, or its cash value) courts select, the amount potentially owed by an individual defendant could swing dramatically from a nominal figure to significant multiples of what the defendant actually withdrew.</p> <p>In <em>In re Celsius Customer Preference Actions</em>,[[N: Adv. Pro. No. 24-04024-MG, 2026 WL 1999187, at *1 (Bankr. S.D.N.Y. July 10, 2026) (<em>Celsius CPA</em>).]] the Court addressed these open questions and held that:</p> <ul> <li>For depreciating assets, whether or not a defendant is still in possession of the asset, the Litigation Administrator may recover the transfer-date value.</li> <li>For appreciating assets that are in a defendant&rsquo;s possession, the Litigation Administrator may recover the asset itself.</li> <li>For appreciating assets that a defendant has sold, the Litigation Administrator may recover the sale price; provided, that defendants must sufficiently establish that the assets were sold and the price at which they were sold and if they are unable to do so, the Litigation Administrator may recover the current (judgment-date) value of the digital assets.</li> </ul> <p>This decision is significant because it is among the first rulings anywhere to squarely address how bankruptcy avoidance action damages should be calculated for volatile digital assets.</p> <h2>Background</h2> <p>Section 547(b) of the Bankruptcy Code governs preferential transfers and, subject to certain statutory defenses, allows trustees or the debtor-in-possession to avoid transfers made by a debtor to a creditor shortly before a bankruptcy filing. To avoid a transfer as preferential, the trustee must show: (1) the transfer was made to or for the benefit of a creditor; (2) it was made on account of an antecedent debt owed before the transfer; (3) the debtor was insolvent at the time of the transfer (insolvency is presumed for the 90 days before the bankruptcy filing); (4) the transfer was made within 90 days of the bankruptcy petition date (or within one year if the recipient was an insider); and (5) the transfer allowed the creditor to receive more than it would have received in a hypothetical Chapter 7 liquidation had the transfer not occurred. The policy rationale behind section 547(b) is twofold: to prevent a race by creditors to grab assets from a financially distressed debtor; and to promote equal treatment of similarly situated creditors by unwinding transfers that would otherwise let one creditor jump ahead of others.</p> <p>Section 550 of the Bankruptcy Code then supplies the remedy once a transfer has been avoided under Section 547. Section 550 provides that the trustee may recover from the transferee either the property that was transferred or, if the court orders it, the value of that property. The Bankruptcy Code, however, does not specify when a court should order the return of property or elect to award the value of the property instead, nor does it specify exactly when value should be measured or how to handle property that has appreciated, depreciated, or been disposed of since the transfer at issue occurred.&nbsp;</p> <h2>The Court&rsquo;s Decision and Reasoning</h2> <p>The Court grounded its decision in the restorative purpose of Section 550; that is, to return the estate to the position it would have occupied had the transfer at issue never occurred. Against that backdrop, the Court adopted an asset-specific framework for recovery under Section 550:</p> <p>For depreciating cryptocurrency, regardless of whether defendants still possess them, the Court held that the Litigation Administrator may recover the transfer-date value of the digital asset. In so holding, the Court noted the broad and largely uniform case support for applying a transfer-date valuation floor to assets that have depreciated since their transfer date. In adopting this body of case law, the Court held that using any lower value measure would unfairly force the estate alone to bear the loss.</p> <p>For assets that have appreciated since the transfer date, however, the Court adopted a more nuanced approach. The Court acknowledged a split in case law with respect to appreciating assets: some courts apply a strict transfer-date rule, while others hold that the appropriate valuation date depends on the circumstances of each case. Rather than blanketly award the Litigation Administrator the full benefit of appreciation regardless of a defendant&rsquo;s actions after withdrawing digital assets, the Court distinguished between digital assets a defendant still holds (recoverable in kind, so the estate captures appreciation) and digital assets a defendant has already sold. For sold assets, the Court limited recovery to the actual sale proceeds, reasoning that requiring a defendant to disgorge current market value long after disposing of a volatile asset could unfairly expose defendants to open-ended, effectively limitless liability untethered from any benefit they actually received, and would risk a windfall to the estate instead of providing the restorative remedy contemplated by Section 550. The Court placed the burden of proving both the fact and the price of any sale on the defendant, reflecting that defendants are best positioned to access their own transaction records.</p> <h2>Conclusion</h2> <p><em>Celsius CPA</em>&rsquo;s valuation framework creates a meaningful planning consideration for recipients of cryptocurrency from distressed crypto platforms. Recipients of cryptocurrency from a platform that files bankruptcy may choose to sell their cryptocurrency in order to fix and cap their liability for a potential preference claim and thereby gain some certainty on their ultimate exposure and risk. At the same time, they can choose to repurchase an equivalent position and thereby resume capturing any further appreciation (and losses) on the repurchased asset going forward. Whether such a strategy would survive scrutiny remains untested, as a court might consider such sales and repurchases as relevant to the potential remedy. This approach also has tax consequences that will need to be evaluated. The holders of assets who wish to sell should take care to properly document any such sale because under this Court&rsquo;s ruling a defendant bears the burden of proving both the occurrence and the price of any sale; absent such proof, exposure defaults to the higher judgment-date value.&nbsp;</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{DD5DD54B-4686-4B2C-B1BB-9C3075582E3E}https://www.arnoldporter.com/en/perspectives/publications/2026/09/virtual-digital-health-digestAllison W. Shurenhttps://www.arnoldporter.com/en/people/s/shuren-allison-wallison.shuren@arnoldporter.comAlexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comFabien Royhttps://www.arnoldporter.com/en/people/r/roy-fabienfabien.roy@arnoldporter.comAbeba Habtemariamhttps://www.arnoldporter.com/en/people/h/habtemariam-abebaAbeba.Habtemariam@arnoldporter.comRaqiyyah Pippinshttps://www.arnoldporter.com/en/people/p/pippins-raqiyyahraqiyyah.pippins@arnoldporter.comNancy L. Perkinshttps://www.arnoldporter.com/en/people/p/perkins-nancy-lnancy.perkins@arnoldporter.comMonique Nolan, M.D., J.D.https://www.arnoldporter.com/en/people/n/nolan-moniquemonique.nolan@arnoldporter.comJames Castro-Edwardshttps://www.arnoldporter.com/en/people/c/castro-edwards-jamesjames.castro-edwards@arnoldporter.comDanait Mengisthttps://www.arnoldporter.com/en/people/m/mengist-danaitdanait.mengist@arnoldporter.comCasey Brouhardhttps://www.arnoldporter.com/en/people/b/brouhard-caseycasey.brouhard@arnoldporter.comJacqueline L. Degannhttps://www.arnoldporter.com/en/people/d/degann-jacquelinejackie.degann@arnoldporter.comSofia Holmquisthttps://www.arnoldporter.com/en/people/h/holmquist-sofiasofia.holmquist@arnoldporter.comAna González-Lamuñohttps://www.arnoldporter.com/en/people/g/gonzalez-lamuno-anaana.lamuno@arnoldporter.comKatherine Rohdehttps://www.arnoldporter.com/en/people/r/rohde-katherinekate.rohde@arnoldporter.comBrianna Morigneyhttps://www.arnoldporter.com/en/people/m/morigney-briannabrianna.morigney@arnoldporter.comLily Caohttps://www.arnoldporter.com/en/people/c/cao-lilylily.cao@arnoldporter.comMickayla A. Stogsdillhttps://www.arnoldporter.com/en/people/s/stogsdill-mickaylamickayla.stogsdill@arnoldporter.comCaroline Oliverhttps://www.arnoldporter.com/en/people/o/oliver-carolinecaroline.oliver@arnoldporter.comThis digest covers key virtual and digital health regulatory and public policy developments during August and early September 2026 from the United States, United Kingdom, and European Union.Wed, 30 Sep 2026 00:00:00 -0500<p>This digest covers key virtual and digital health regulatory and public policy developments during August and early September 2026 from the United States, United Kingdom, and European Union.</p> <h2>In this issue, you will find the following:</h2> <h3>U.S. News</h3> <ul> <li><a href="#Health Care Fraud And Abuse Updates">Health Care Fraud and Abuse Updates</a></li> <li><a href="#Provider Reimbursement Updates">Provider Reimbursement Updates</a></li> <li><a href="#Privacy and AI Updates">Privacy and Artificial Intelligence (AI) Updates</a></li> <li><a href="#Policy Updates">Policy Updates</a></li> <li><a href="#FDA Updates">FDA Updates</a></li> <li><a href="#FTC Updates">FTC Updates</a></li> </ul> <h3>U.S. Featured Content </h3> <p>Enforcement and policy activity this month reflected the government&rsquo;s dual focus on curbing telehealth-related fraud while accelerating a federal framework for artificial intelligence (AI) in health care. The U.S. Department of Justice&rsquo;s (DOJ) newly created National Fraud Enforcement Division named telemedicine and Medicare/Medicaid fraud as top enforcement priorities, a focus underscored by a two-year prison sentence in a $110 million telemedicine durable medical equipment (DME) scheme. On the regulatory front, the Drug Enforcement Administration&rsquo;s (DEA) long-awaited final rule on special registration for telemedicine prescribing of controlled substances is now under the White House Office of Management and Budget (OMB) review, while the Centers for Medicare &amp; Medicaid Services (CMS) expanded its value-based ACCESS model to cover additional chronic conditions and unveiled plans for an AI-inferred risk-adjustment model in its LEAD ACO program. Congress also weighed in, with bipartisan legislation introduced to require human review of AI-driven medical-necessity denials, and the Federal Trade Commission (FTC) rescinded its 2021 policy statement extending health data breach notification obligations to health apps. Meanwhile, the U.S. Food and Drug Administration (FDA) continued to build out its AI infrastructure and leadership, naming its first Deputy Commissioner for Technology and Artificial Intelligence, migrating agency staff to an upgraded internal AI tool, and issuing a paper on using digitally derived measures in clinical investigations. Together, these developments show U.S. regulators and lawmakers moving in parallel: tightening enforcement against exploitative telehealth practices while laying the institutional groundwork for AI&rsquo;s expanding role in health care delivery and oversight.</p> <h3>EU and UK News</h3> <ul> <li><a href="#Regulatory Updates">Regulatory Updates</a></li> <li><a href="#Privacy Updates">Privacy Updates</a></li> </ul> <h3>EU/UK Featured Content </h3> <p>The more significant developments this month have been in the data protection space. Notably, Uber was fined almost &euro;825 million following a finding that they breached the general prohibition on fully automated decision-making in the General Data Protection Regulation (GDPR). This decision serves as an important reminder for the need for meaningful human review in the Life Sciences industry as companies increasingly rely on AI-assisted decision-making, for example in screening candidates for eligibility to take part in clinical trials.</p> <p>Further, the European Data Protection Board (EDPB) has written to the European Commission to request that the commission &ldquo;closely assess&rdquo; the recent U.S. Supreme Court decision of <em>Trump v. Slaughter</em> and its impact on the EU-U.S. Data Privacy Framework (DPF) adequacy decision. The EDBP has raised that this decision, which holds that the statutory protection against removal of Federal Trade Commissioners are unconstitutional, may affect the validity of the DPF decision.</p> <p>Other developments include that the International Medical Device Regulators Forum (IMDRF) has published technical guidance regarding Predetermined Change of Control Plans (PCCP) for medical device software. This guidance intends to foster regulatory harmonization by identifying the essential principles for developing PCCP.&nbsp; </p> <h2>U.S. News</h2> <h3><a name="Health Care Fraud And Abuse Updates">Health Care Fraud And Abuse Updates</a></h3> <p><strong><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/assistant-attorney-general-colin-m-mcdonald-issues-memorandum-national-fraud-enforcement" target="_blank">The Fraud Division&rsquo;s Enforcement Priorities Memorandum</a></strong>. On August 13, 2026, Assistant Attorney General Colin M. McDonald issued a memorandum to all personnel in the National Fraud Enforcement Division, setting forth the enforcement priorities of the newly created division. The memorandum identified five priority areas: public trust and financial integrity, health care, internal revenue, global trade and commerce, and corporate misconduct. The memorandum states that the division will use, &ldquo;cutting-edge data analysis to target exploitative health care fraud schemes,&rdquo; expressly naming telemedicine programs and Medicare and Medicaid fraud. The memorandum further commits to &ldquo;supercharging&rdquo; the Health Care Fraud Strike Force model with additional resources, data analytics support, and technology.&nbsp;</p> <p><strong><a rel="noopener noreferrer" href="https://www.justice.gov/usao-ma/pr/former-owner-telemedicine-companies-sentenced-two-years-prison-110-million-medicare" target="_blank">Owner of Telemedicine Companies Sentenced in Medicare Fraud Scheme</a></strong>. On August 20, 2026, Steven Richardson, former owner of Expansion Media and Hybrid Management Group, was sentenced to two years in prison for a $110 million telemedicine scheme involving medically unnecessary DME. The government alleged that between March 2016 and January 2023, Richardson contracted with telemarketing companies that generated leads by targeting Medicare beneficiaries and paid Richardson&rsquo;s companies on a per-order basis to generate DME orders. As part of the scheme, doctors and nurses allegedly reviewed and signed prepopulated orders without examining the beneficiary, falsely making it appear a legitimate exam had occurred. Richardson then allegedly provided the signed orders back to the telemarketers, who sold them to DME suppliers. In turn, those suppliers submitted claims to Medicare for equipment.&nbsp;</p> <h3><a name="Provider Reimbursement Updates">Provider Reimbursement Updates</a></h3> <p><strong><a rel="noopener noreferrer" href="https://www.reginfo.gov/public/do/eoDetails?rrid=1510512" target="_blank">DEA Special Registration Final Rule for Telemedicine Prescribing Is Under OMB Review</a></strong>. The DEA has submitted its final rule, Special Registrations for Telemedicine and Limited State Telemedicine Registrations, to the OMB for review. OMB&rsquo;s Office of Information and Regulatory Affairs received the rule on August 25, 2026, and lists it as an economically significant DOJ/DEA final rule.</p> <p>At issue is a permanent federal framework for prescribing controlled substances via telemedicine when the practitioner and patient have not had a prior in-person medical evaluation. The Ryan Haight Online Pharmacy Consumer Protection Act of 2008 generally requires an in-person medical evaluation before a practitioner may prescribe or dispense controlled substances by means of the internet, subject to specified exceptions within the statutory definition of the &ldquo;practice of telemedicine.&rdquo; One such exception applies to a practitioner who obtains a special registration from the DEA Administrator under 21 U.S.C. &sect; 831(h).</p> <p>DEA&rsquo;s January 2025 proposed rule would have established a special-registration framework under which practitioners and mid-level practitioners could prescribe controlled substances through audio-video telemedicine, and, in limited circumstances, video-only telemedicine, without a prior in-person medical evaluation, provided they complied with applicable prescribing, recordkeeping, and reporting requirements. It also proposed to require certain direct-to-consumer telemedicine platforms to register with DEA when they engage in intermediary conduct integral to the provider-patient relationship.</p> <p>DEA had described the proposal as permitting special registrants to prescribe Schedule III-V controlled substances remotely and, for certain board-certified specialists, to obtain an advanced registration for designated Schedule II prescribing. The proposal also contemplated online-platform registration and a nationwide prescription drug monitoring program. The final rule&rsquo;s text and safeguards are not yet public. DEA reports that it reviewed more than 6,400 comments on the 2025 proposal and is considering alternatives in drafting a final rule responsive to public and industry concerns. DEA&rsquo;s current agenda anticipates final action in November 2026. In the interim, DEA and the U.S. Department of Health and Human Services (HHS) have extended the existing telemedicine prescribing flexibilities through December 31, 2026.</p> <h3><a name="Privacy and AI Updates">Privacy and AI Updates</a></h3> <p><strong><a rel="noopener noreferrer" href="https://www.cms.gov/priorities/innovation/innovation-models/access" target="_blank">CMS Expands ACCESS to Cover Chronic Conditions</a></strong>. On September 15, 2026, CMS announced that it is expanding its &ldquo;Advancing Chronic Care with Effective, Scalable Solutions&rdquo; (ACCESS) model to include four new areas of remote treatment for selected chronic diseases. ACCESS, which began in July and will continue for a 10-year period, gives participating organizations recurring payments tied to improvements in patient health rather than traditional fee-for-service reimbursement through Medicare and Medicaid. Initially, ACCESS&rsquo; coverage &ldquo;tracks&rdquo; were for technology used to treat early cardiovascular, kidney, and musculoskeletal pain. The new expansion will mean that, as of the spring of 2027, ACCESS will also offer technology options to Medicare beneficiaries who have heart failure, chronic obstructive pulmonary disease (COPD), substance use disorders, and nicotine dependence. CMS will also publish a reference guide in the future on specification for a maternal cardiovascular kidney metabolic track, including hypertensive disorders for pregnancy, as a voluntary reference that other payers, including Medicaid plans, can use to support cross-payer alignment.</p> <p><strong><a rel="noopener noreferrer" href="https://assets.law360news.com/2523000/2523218/health-breach-commission-statement.pdf" target="_blank">FTC Rescinds Policy Statement on Health Apps Under Health Breach Notification Rule</a></strong>. On September 9, 2026, the FTC rescinded its 2021 Statement of the Commission on Breaches by Health Apps and Other Connected Devices, which took the position that certain mobile applications and connected devices collecting consumers&rsquo; health information qualify as &ldquo;vendors of personal health records&rdquo; subject to the FTC&rsquo;s Health Breach Notification Rule (HBNR). The HBNR, which is the FTC&rsquo;s regulation implementing the Health Information Technology for Economic and Clinical Health (HITECH) Act, requires vendors of personal health records that are not HIPAA-covered entities to notify individuals, the FTC, and in some cases, the media, of breaches in the security of personal health information, in the same manner as HIPAA requires for HIPAA-covered entities. In rescinding the 2021 policy statement, the FTC stated that it provided &ldquo;minimal benefit&rdquo; and that its rescission advances the current administration&rsquo;s deregulation of metabolic diseases, such as hypertension, diabetes, depression, and anxiety, and the commission&rsquo;s policy of avoiding unnecessary subregulatory guidance. It is unclear how the rescission may impact enforcement of the HBNR, which was amended in 2024 in part to indicate coverage of mobile apps and connected devices.</p> <h3><a name="Policy Updates">Policy Updates</a></h3> <p><strong><a href="https://www.cms.gov/priorities/innovation/files/lead-tech-faqs.pdf">CMS Developing an AI-Inferred Risk-Adjustment Model for the LEAD Model</a></strong>. On August 17, 2026, the CMS stated that it is developing an AI-inferred risk-adjustment model for the Long-Term Enhanced ACO Design (LEAD) Model. CMS plans to share AI-inferred scores with participating Accountable Care Organizations for 2028 shadow testing, use a phased blend of AI-inferred and conventional scores in 2029 and 2030, and fully integrate AI-inferred scores for the aged and disabled population beginning in 2031, subject to testing and validation.</p> <p><strong><a rel="noopener noreferrer" href="https://landsman.house.gov/posts/landsman-introduces-bipartisan-legislation-to-keep-ai-from-making-health-care-decisions" target="_blank">Representatives Introduce Doctors Not AI Act</a></strong>. On September 1, 2026, Reps. Greg Landsman (D-OH), Buddy Carter (R-GA), Kim Schrier (D-WA), and Tom Barrett (R-MI) introduced the Doctors Not AI Act (<a rel="noopener noreferrer" href="https://www.congress.gov/bill/119th-congress/house-bill/10210" target="_blank">H.R. 10210</a>). The bill would permit AI to assist with claims processing, but require a licensed health care professional with appropriate expertise to make medical-necessity denials after independently reviewing the patient&rsquo;s individual medical circumstances. It also would require disclosure when AI is used in the review process.</p> <p><strong><a rel="noopener noreferrer" href="https://www.fda.gov/news-events/press-announcements/fda-seeks-public-feedback-inform-regulatory-approach-generative-ai-enabled-medical-devices" target="_blank">FDA Seeks Feedback on Risk Assessment, Premarket Evaluation, Postmarket Monitoring, and Related Issues</a></strong>. On August 18, 2026, FDA issued Considerations for the Regulation of Generative AI-Enabled Medical Devices: Discussion Paper and Request for Feedback. The Digital Health Center of Excellence, within FDA&rsquo;s Center for Devices and Radiological Health, is seeking feedback on risk assessment, premarket evaluation, postmarket monitoring, and related issues. The paper is for discussion only and does not constitute draft or final guidance or propose changes to FDA policy. Feedback is due October 19, 2026.</p> <p><strong>FDA Migrates to Elsa 4.0</strong>. On August 24, 2026, FDA migrated all agency staff to Elsa 4.0 from the legacy model of its FDA-specific AI tool. Originally announced in May, Elsa 4.0 offers enhanced search and research tools.</p> <h3><a name="FDA Updates">FDA Updates</a></h3> <p><strong><a rel="noopener noreferrer" href="https://www.hhs.gov/press-room/hhs-announces-key-fda-leadership-selections.html" target="_blank">FDA Announces New Deputy Commissioner for Technology and Artificial Intelligence</a></strong>. On September 8, 2026, HHS announced four senior leadership selections at the FDA, including the creation of FDA&rsquo;s first Deputy Commissioner for Technology and Artificial Intelligence. Jared Seehafer, M.S., has been selected for the newly created role. As FDA&rsquo;s senior leader for technology, software, and AI, Seehafer will lead the development of FDA strategy and priorities in these areas. HHS stated that the position reflects the administration&rsquo;s focus on accelerating reliable AI innovation, modernizing federal technology, and establishing an effective regulatory framework for emerging technologies. Seehafer brings two decades of technical and leadership experience involving software, AI, and FDA-regulated medical technology.</p> <p>The announcement also makes permanent three officials who had been serving in acting capacities: Michael Davis, M.D., Ph.D., as Director of the Center for Drug Evaluation and Research; Karim Mikhail, B.Pharm, M.Sc., as Director of the Center for Biologics Evaluation and Research; and Bret Koplow, Ph.D., J.D., as Director of the Center for Tobacco Products. Collectively, the selections indicate FDA&rsquo;s continued emphasis on modernization, innovation, and cross-center infrastructure, including technology and AI capabilities, as the agency advances its public health priorities.</p> <h3><a name="FTC Updates">FTC Updates</a></h3> <p><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/p034101-ftc-enforcement-policy-statement-re-personalized-pricing-proposed-for-public-comment.pdf" target="_blank">FTC Proposes Enforcement Policy Statement on Personalized Pricing</a>. On August 19, 2026, the FTC issued a proposed policy statement explaining that it intends to pursue personalized-pricing practices that it views as deceptive or unfair under Section 5 of the FTC Act. The statement does not propose to prohibit personalized pricing outright, and recognizes that prices may appropriately vary based on factors such as supply and demand, geography, taxes, market conditions, and risk-based underwriting in industries such as insurance and credit. But where consumers reasonably expect a price to be static or widely available, the FTC takes the position that businesses using personal data to set an individualized price should clearly and conspicuously disclose that the price is personalized, the basis for the personalization, and the types of data used. The FTC cautions that a generic statement that a price is &ldquo;specially selected&rdquo; would likely be insufficient. The statement also flags potential privacy concerns where businesses collect, use, or obtain personal data for personalized pricing without adequate notice and consent, including where they fail to verify that a third-party data source obtained the requisite consumer consent. Although the statement is nonbinding and does not create new legal requirements, it signals heightened FTC scrutiny of data-driven pricing &mdash; particularly where pricing is based on consumers&rsquo; perceived willingness or inability to shop elsewhere, health needs, household characteristics, or other sensitive circumstances.</p> <p> </p> <h2>EU and UK News</h2> <h3><a name="Regulatory Updates">Regulatory Updates</a></h3> <p><a rel="noopener noreferrer" href="https://ec.europa.eu/newsroom/sante/newsletter-archives/74172" target="_blank"></a><strong><a href="https://www.imdrf.org/documents/essential-principles-and-content-predetermined-change-control-plans" target="_blank">IMDRF Publishes Technical Guidance Document Regarding Predetermined Change Control Plans for Medical Device Software</a></strong>. The IMDRF has published a technical guidance document regarding PCCP for medical device software. Whereas traditional regulatory processes may lead to delays in deploying important updates to medical device software because the manufacturer would be required to submit a new or additional application for relevant changes, a PCCP allows the manufacturer to receive advance authorization for multiple planned changes during the initial or an existing application. The guidance sets out what PCCPs should contain and is intended to support regulatory harmonization without superseding existing national laws or regulations. It identifies the essential principles for developing PCCPs, including that they must be risk-based, evidence-based, transparent, and focused.</p> <p><strong><a rel="noopener noreferrer" href="https://www.nice.org.uk/news/blogs/nice-listens-hearing-the-public-s-views-on-ai-in-health-and-care" target="_blank">NICE Launches Public Dialogue on the Use of AI in Health Care</a></strong>. NICE has announced that AI will be the next topic considered through its &ldquo;NICE Listens&rdquo; public engagement program, which aims to explore the moral, ethical, social, and value-based questions that underpin complex health care decisions. NICE states that, while AI has the potential to support diagnosis, productivity, and help services respond to growing pressure, its increasing use also raises important questions regarding trust, transparency, accountability, and fairness. NICE will use the dialogue to shape its approach to AI effectively and at an early stage. The dialogue will help inform how NICE communicates about AI-related guidance, thinks about evidence and value, and how NICE builds confidence in decisions that may increasingly involve AI-enabled technologies.</p> <p><strong><a rel="noopener noreferrer" href="https://www.asa.org.uk/news/regulating-the-illusion-of-intelligence-in-ads.html" target="_blank">UK Advertising Standard Authority (ASA) Issues Guidance on the Illusion of Artificial Intelligence in Advertisements</a></strong>. ASA issued guidance on the illusion of artificial intelligence in advertisements. ASA has advised advertisers to be careful with the claims that they make in relation to AI chatbots including those which are proposed to be used as a tool for patients waiting to talk to mental health care professionals. ASA has recommended that any advertisement should avoid implying that the AI tool can be used in place of a qualified therapist, and any claims that the apps are suitable for emergency or crisis situations are strongly discouraged. If health claims are made, the advertiser must be able to provide evidence to support them. However, ASA&rsquo;s &ldquo;CAP Code&rdquo; only applies to advertisements rather than the products which are advertised. Therefore, the ASA cannot necessarily comment on the AI products themselves.</p> <h3><a name="Privacy Updates">Privacy Updates</a></h3> <p><a rel="noopener noreferrer" href="https://www.edpb.europa.eu/system/files/2026-04/edpb_guidelines_202601_scientificresearch_en.pdf" target="_blank"></a><strong><a href="https://www.autoriteitpersoonsgegevens.nl/en/current/uber-fined-nearly-825-million-euros-for-automated-driver-blocking" target="_blank">Dutch DPA Fines Uber Almost &euro;825 Million Over Unlawful Automated Decision-Making</a></strong>. The Autoriteit Persoonsgegevens (AP), the Dutch data protection authority, has fined Uber &euro;824,990,000 after finding that the company breached the GDPR&rsquo;s prohibition on fully automated decision-making. The AP found that, between 2018 and 2022, Uber used software to monitor drivers&rsquo; behavior and customer ratings and, where the software flagged suspected fraud or persistently low ratings, automatically suspended or permanently deactivated drivers&rsquo; accounts with no meaningful human review, cutting off their income with immediate effect. The AP also found that Uber failed to give drivers adequate information about this automated decision-making. The investigation originated from complaints by 171 French drivers to the Ligue des droits de l&rsquo;Homme, which were referred to the CNIL and, because Uber&rsquo;s European headquarters are in the Netherlands, passed to the AP as lead supervisory authority. Uber has said it disagrees with the decision and will appeal. This is the second-largest fine ever imposed under the GDPR, after the Irish DPC&rsquo;s &euro;1.2 billion fine against Meta in 2023, and a reminder of the priority EU regulators continue to place on Article 22 GDPR compliance for algorithmic human resource (HR) and platform-worker decisions. Life sciences companies increasingly rely on automated or AI-assisted decision-making of their own, for example in screening clinical trial candidates for eligibility, or managing HR and field-force decisions, and this decision is a reminder that such systems generally require meaningful human review and clear upfront information to the individuals affected wherever they produce legal or similarly significant effects.</p> <p><strong><a rel="noopener noreferrer" href="https://www.edpb.europa.eu/documents/edpb-correspondence/edpb-letter-to-the-european-commission-on-us-supreme-court-judgment_en" target="_blank">EDPB Asks European Commission to Assess Impact of U.S. Supreme Court Ruling on EU-U.S. Data Privacy Framework</a></strong>. Following a discussion at its June plenary, the EDPB has written to European Commissioner Michael McGrath asking the commission to &ldquo;closely assess&rdquo; whether the U.S. Supreme Court&rsquo;s judgment in <em>Trump v. Slaughter</em> (June 29, 2026), which held that statutory protections against at-will removal of FTC commissioners are unconstitutional, affects the continued validity of the EU-U.S. DPF adequacy decision. In its letter to Commissioner McGrath, dated July 31, 2026 (reported August 3, 2026), the EDPB notes that the existence and effective functioning of independent supervisory authorities in a third country is a key factor in assessing adequacy, and that the DPF adequacy decision expressly relied on FTC commissioners being removable only for cause. The DPF adequacy decision remains in force and transfers under it remain lawful; the letter does not itself change the legal position, but it formally puts the question before the commission and may prompt a wider review of the framework. This is particularly relevant for life sciences companies that rely on the DPF for transatlantic transfers of clinical, research, or HR data, who should keep transfer impact assessments under review as this develops.&nbsp; &nbsp;</p> <p><span style="font-size: small;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{3A9E25A5-83B2-4D25-9559-94962FDD8EB5}https://www.arnoldporter.com/en/perspectives/publications/2026/09/chapter-11-exit-mechanismsJustin Imperatohttps://www.arnoldporter.com/en/people/i/imperato-justinjustin.imperato@arnoldporter.comBenjamin Mintzhttps://www.arnoldporter.com/en/people/m/mintz-benjaminbenjamin.mintz@arnoldporter.comChapter 11 debtors exit bankruptcy through one or a combination of the following mechanisms: (1) confirmation of a plan under Section 1129 of the Bankruptcy Code, (2) a sale of all or substantially all of their assets under Section 363 of the Bankruptcy Code, which may be accomplished through or outside a confirmed plan, (3) dismissal or structured dismissal of the Chapter 11 case, or (4) conversion of the Chapter 11 case to one under Chapter 7 and the subsequent liquidation of the debtor's assets by a Chapter 7 trustee.Tue, 29 Sep 2026 00:00:00 -0500<p>Chapter 11 debtors exit bankruptcy through one or a combination of the following mechanisms: (1) confirmation of a plan under Section 1129 of the Bankruptcy Code, (2) a sale of all or substantially all of their assets under Section 363 of the Bankruptcy Code, which may be accomplished through or outside a confirmed plan, (3) dismissal or structured dismissal of the Chapter 11 case, or (4) conversion of the Chapter 11 case to one under Chapter 7 and the subsequent liquidation of the debtor's assets by a Chapter 7 trustee. A Section 363 sale, for example, may be followed by a structured dismissal or a plan of reorganization or liquidation. A reorganization or liquidating plan may incorporate Section 363 sale mechanics. And dismissal or conversion often occurs only after the estate has been substantially monetized. Practitioners must therefore understand each pathway in depth and assess their interaction and sequencing when developing the most appropriate Chapter 11 exit strategy. his practice note details the principal mechanisms through which debtors exit Chapter 11 cases and the legal and practical considerations associated with each exit pathway.</p> <p><a href="https://signin.lexisnexis.com/lnaccess/app/signin?back=https%3A%2F%2Fadvance.lexis.com%3A443%2Furl-api%2Flaapi%2Fpermalink%2F327e34ab-3fa5-4b21-b1e9-b4feecd32a95%2F%3Fcontext%3D1000522&amp;aci=pa">Read the full article</a> (subscription required).</p>{B4A22F1B-A068-478A-A089-910340E4535A}https://www.arnoldporter.com/en/perspectives/publications/2026/09/chapter-11-exit-strategyJustin Imperatohttps://www.arnoldporter.com/en/people/i/imperato-justinjustin.imperato@arnoldporter.comBenjamin Mintzhttps://www.arnoldporter.com/en/people/m/mintz-benjaminbenjamin.mintz@arnoldporter.comThe choice of exit strategy can significantly affect the cost, duration, and outcome of a Chapter 11 case. Different restructuring pathways may require different levels of creditor support, financing, operational stability, and stakeholder coordination.Tue, 29 Sep 2026 00:00:00 -0500<p>The choice of exit strategy can significantly affect the cost, duration, and outcome of a Chapter 11 case. Different restructuring pathways may require different levels of creditor support, financing, operational stability, and stakeholder coordination. Understanding these considerations can help debtors and their stakeholders evaluate available alternatives and position the case for a successful restructuring. Practitioners should understand the circumstances in which each pathway is available, the statutory requirements governing its use, and how these mechanisms may be employed individually or in combination to facilitate a debtor's exit from Chapter 11. This practice note provides an overview of the principal Chapter 11 exit pathways and addresses certain considerations that frequently influence the pathway debtors may pursue.</p> <p><a href="https://signin.lexisnexis.com/lnaccess/app/signin?back=https%3A%2F%2Fadvance.lexis.com%3A443%2Furl-api%2Flaapi%2Fpermalink%2Fd064d893-8b6f-4a5d-bcee-35cc5851c0c2%2F%3Fcontext%3D1000522&amp;aci=pa">Read the full article</a> (subscription required).</p>{B926F75C-4140-4CC7-88F8-C5C645B60838}https://www.arnoldporter.com/en/perspectives/events/2026/09/cmmc-phase-2-is-on-hold-but-cybersecurity-compliance-and-enforcement-are-notTirzah S. Lollarhttps://www.arnoldporter.com/en/people/l/lollar-tirzah-stirzah.lollar@arnoldporter.comThomas A. Pettithttps://www.arnoldporter.com/en/people/p/pettit-thomasthomas.pettit@arnoldporter.comAlthough CMMC Phase 2 is currently on hold, cybersecurity compliance obligations&mdash;and the enforcement risks associated with them&mdash;remain a pressing concern for government contractors.Mon, 28 Sep 2026 00:00:00 -0500<p>Although CMMC Phase 2 is currently on hold, cybersecurity compliance obligations&mdash;and the enforcement risks associated with them&mdash;remain a pressing concern for government contractors. Contractors must continue to meet existing cybersecurity requirements and track evolving obligations, such as the FAR Council&rsquo;s proposed rule addressing safeguarding and handling of Controlled Unclassified Information (CUI).</p> <p>Join Arnold &amp; Porter attorneys Tirzah Lollar and Tom Pettit for a practical discussion of the cybersecurity issues government contractors should be addressing now. They will examine the current regulatory landscape, emerging compliance requirements, and the government&rsquo;s growing use of the False Claims Act to enforce cybersecurity obligations.</p> <p> </p> <h2>Topics will include:</h2> <ul> <li>DoD cybersecurity requirements and the implications of the CMMC Phase 2 pause for ongoing compliance obligations.</li> <li>GSA and other non-DoD cybersecurity requirements affecting federal contractors.</li> <li>The FAR Council&rsquo;s proposed CUI rule and its potential impact on contractor compliance programs.</li> <li>Cyber incident response strategies, including key considerations following a suspected or confirmed incident.</li> <li>Cybersecurity enforcement through the False Claims Act and practical steps to reduce FCA risk.</li> </ul>{89EF32E4-0F68-4D9C-A82F-9326B1399AAF}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/09/debbie-feinstein-unpacks-dojs-new-civil-subpoena-deadline-policy-in-bloomberg-lawDebbie Feinstein, Arnold &amp; Porter Antitrust/Competition partner and former Bureau of Competition Director at the U.S. Federal Trade Commission (FTC), was quoted in the recent <em>Bloomberg Law </em>article, "DOJ Move to Speed Civil Antitrust Investigations Draws Doubts," on a September 8 memo in which Associate Attorney General Stanley Woodward instructed Antitrust Division attorneys to stop routinely granting extensions on deadlines for civil investigative demands (CIDs) and to sue more often when recipients miss the original deadline.Mon, 28 Sep 2026 00:00:00 -0500<p>Debbie Feinstein, Arnold &amp; Porter Antitrust/Competition partner and former Bureau of Competition Director at the U.S. Federal Trade Commission (FTC), was quoted in the recent <em>Bloomberg Law </em>article, "DOJ Move to Speed Civil Antitrust Investigations Draws Doubts," on a September 8 memo in which Associate Attorney General Stanley Woodward instructed Antitrust Division attorneys to stop routinely granting extensions on deadlines for civil investigative demands (CIDs) and to sue more often when recipients miss the original deadline.</p> <p>Debbie noted that a company's response to a CID deadline often depends on how broad the government's request is, since CIDs are typically answered on a rolling basis, with extensions built in over time. Because reviewing large volumes of documents takes time on both sides, she cautioned that compressed deadlines may not speed things up the way DOJ intends.</p> <p>"Realistically, the government can only look at things so quickly," she said. "The idea that 'Oh we have to have a million documents in the first month,' well they're not going to process a million documents themselves. It takes time to go through that. It takes time to understand them."</p> <p><a href="https://www.bloomberglaw.com/login?target=https%3A%2F%2Fwww.bloomberglaw.com%2Fproduct%2Fblaw%2Fbloomberglawnews%2Fbloomberg-law-news%2FX1MIUGEKL839MSAKRBBGE13LM5J%3Fcriteria_id%3Da5061dbaf4e3389c93cb7d1f4ad1c9be%26search32%3DblZv56c_zMKWy3UFgyXlEQ%3D%3D-qp3Cn2JmihWf9fhgr4bmjkeNNFD7yIaTKXOrD5RUhADdRBsCMc983OYSqeR72JfA8qivJXvnO9iEzWxW7MkLg%3D%3D">Read the full article</a> (subscription required).</p>{41871B46-5B20-4930-9F4E-C7B4CF859FE4}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/09/rachel-cotton-talks-congressional-investigation-risks-in-law360Arnold &amp; Porter White Collar Defense &amp; Investigations partner Rachel Cotton was quoted in the recent <em>Law360 </em>article, "Congressional Probes Raise Legal, 'Reputational' Risks," which examined the challenges companies and executives could face from congressional investigations.Mon, 28 Sep 2026 00:00:00 -0500<p>Arnold &amp; Porter White Collar Defense &amp; Investigations partner Rachel Cotton was quoted in the recent <em>Law360 </em>article, "Congressional Probes Raise Legal, 'Reputational' Risks," which examined the challenges companies and executives could face from congressional investigations.</p> <p>Rachel explained that companies facing congressional scrutiny often focus on the threat of a criminal contempt prosecution, but that reputational risk can also prove consequential. "Congress' most practical weapons have always been leverage and attempts at reputational damage, rather than just the threat of contempt," she said.</p> <p>Rachel also touched on broader dynamics around the likely congressional scrutiny of private companies if the Democrats win control of the House in the midterm elections. "The [congressional] committees can investigate around an uncooperative White House by going after the more traditionally nonpartisan actors like corporations, contractors, banks and other private parties whose incentives to comply include, but are certainly not limited to, criminal prosecution," Cotton said.</p> <p><a href="https://www.law360.com/compliance/articles/2529838">Read the full article</a> (subscription required).</p>{9EBEF279-7458-4D4F-B084-2C1554E962AC}https://www.arnoldporter.com/en/perspectives/news/2026/09/arnold-porter-advises-bcb-bancorp-in-definitive-agreements-to-sell-problem-loan-portfoliosArnold &amp; Porter recently served as counsel to BCB Bancorp, Inc., the parent company of BCB Community Bank, in connection with definitive agreements with six purchasers to sell several portfolios of certain problem loans.Mon, 28 Sep 2026 00:00:00 -0500<p>Arnold &amp; Porter recently served as counsel to BCB Bancorp, Inc., the parent company of BCB Community Bank, in connection with definitive agreements with six purchasers to sell several portfolios of certain problem loans.</p> <p>The agreements, entered into between September 21 and 24, 2026, provide for the sale of loans with an aggregate unpaid principal balance of approximately $205.3 million as of June 30, 2026. Five of the six loan sale transactions have closed, with the last transaction expected to close before the end of Q3 2026.</p> <p>The Arnold &amp; Porter corporate team was led by partner Rob Azarow and included counsel Stephanie Nygard and senior associate Ashleigh Heffernan. Senior associate Greg Criscitello and associate Remila Jasharllari provided support on related public disclosures.</p>{AD00A639-3105-4969-A32F-5C3DB39E7A8A}https://live.chemicalwatch.com/event/regulatory-summit-north-america-2026/chemicals-control-agendacamille.heyboer@arnoldporter.comMon, 28 Sep 2026 00:00:00 -0500{8FC28A76-8CF0-4B4E-898B-B27E0259C6D9}https://plus.pli.edu/Details/Details?rows=10&fq=~2B~f_year~3A~(~5B2A20~TO~202A5D~)&fq=~2B~isarchived~3A~(~22~0~22~)&fq=~2B~id~3A~(~2B22~447832-CH3~22~)&sort=score+desc%2cs_date+desc&q=Claire+Dennis&origin=searchclaire.dennis@arnoldporter.comFri, 25 Sep 2026 00:00:00 -0500{1F101125-69FF-4C60-ABBB-F5F2E544EAD1}https://plus.pli.edu/Details/Details?rows=10&fq=~2B~file~3A~(~2B22~Chapter13_Medical_Devices_Law_AB_XML.xml~22~)&fq=~2B~series_id~3A~(~2B22~1004661~22~)claire.dennis@arnoldporter.comFri, 25 Sep 2026 00:00:00 -0500{DA24DCFE-E05F-4911-A1B7-99E3B0AF41E8}https://members.abi.org/s/event/a0pao00000D6O1lAAF/bankruptcy-2025-views-from-the-benchrosa.evergreen@arnoldporter.comFri, 25 Sep 2026 00:00:00 -0500{334A07DE-90F4-422C-A518-C7CA0727633A}https://www.arnoldporter.com/en/perspectives/events/2026/09/power-permitting-and-progress-navigating-todays-data-center-challengesSandra E. Rizzohttps://www.arnoldporter.com/en/people/r/rizzo-sandra-eSandra.Rizzo@arnoldporter.comEthan G. Shenkmanhttps://www.arnoldporter.com/en/people/s/shenkman-ethan-gethan.shenkman@arnoldporter.comAmid a surge in data center demand, communities, policymakers, developers, and energy stakeholders are grappling with increasingly complex environmental, energy, and economic development questions.Thu, 24 Sep 2026 00:00:00 -0500<p>Amid a surge in data center demand, communities, policymakers, developers, and energy stakeholders are grappling with increasingly complex environmental, energy, and economic development questions. Join <a rel="noopener noreferrer" href="https://www.arnoldporter.com/en" target="_blank">Arnold &amp; Porter</a> and the <a rel="noopener noreferrer" href="https://bcse.org/about-bcse/" target="_blank">Business Council for Sustainable Energy (BCSE)</a> for a timely discussion featuring legal, policy, sustainability, energy, and industry leaders at the forefront of one of today&rsquo;s most significant infrastructure and energy challenges. Panelists will also provide an overview of the new wave of legal challenges and environmental disputes targeting data centers, drawing valuable lessons for those in the field.</p> <p>The event will begin with a networking breakfast, allowing attendees ample time to connect and engage with colleagues before transitioning into a substantive panel discussion. The conversation will examine challenges related to permitting, power demand, environmental review, community engagement, and clean energy, while highlighting practical approaches and lessons learned from projects currently navigating these issues.</p> <p>The program is designed for policymakers, corporate sustainability leaders, developers, environmental professionals, utilities, legal practitioners, and other stakeholders interested in the future of data center policy and infrastructure.</p>{F931B6EF-590F-418A-85BE-FA816262DEDD}https://www.arnoldporter.com/en/perspectives/events/2026/09/when-national-security-meets-life-sciences-navigating-the-expanding-us-and-europeanJohn P. Barkerhttps://www.arnoldporter.com/en/people/b/barker-john-pjohn.barker@arnoldporter.comEun Young Choihttps://www.arnoldporter.com/en/people/c/choi-eun-youngEunYoung.Choi@arnoldporter.comDeborah A. Curtishttps://www.arnoldporter.com/en/people/c/curtis-deborahdeborah.curtis@arnoldporter.comDr. Alexander Italianerhttps://www.arnoldporter.com/en/people/i/italianer-alexanderalexander.italianer@arnoldporter.comBobby McMillinhttps://www.arnoldporter.com/en/people/m/mcmillin-bobbybobby.mcmillin@arnoldporter.comNational security considerations are rapidly reshaping the life sciences industry, with evolving U.S. and European regulations affecting research, clinical trials, supply chains, investment, data governance, and commercialization.Thu, 24 Sep 2026 00:00:00 -0500<p>National security considerations are rapidly reshaping the life sciences industry, with evolving U.S. and European regulations affecting research, clinical trials, supply chains, investment, data governance, and commercialization. Join Arnold &amp; Porter attorneys for the fourth installment of our National Security Webinar Series as they examine the latest developments across the U.S. and European national security landscape, including countries of concern, investment controls, human &rsquo;omic data restrictions, and AI-related risks.</p> <p>Attendees will gain practical insights into the compliance, operational, and strategic implications of these evolving requirements and learn proactive steps to help manage risk while supporting innovation and global business objectives.</p>{EFD2E3CC-E771-44D2-825E-2840E8A5E7B5}https://www.arnoldporter.com/en/perspectives/events/2026/09/arnold-porters-2026-chicago-consumer-products-retail-forumAt a moment when the regulatory and legal environment is shifting across virtually every front, Arnold &amp; Porter invites you to our inaugural Chicago forum, a program designed for legal and business leaders in the consumer products, food &amp; beverage, and retail industries.Thu, 24 Sep 2026 00:00:00 -0500<p>At a moment when the regulatory and legal environment is shifting across virtually every front, Arnold &amp; Porter invites you to our inaugural Chicago forum, a program designed for legal and business leaders in the consumer products, food &amp; beverage, and retail industries.</p> <p>The program will open with a networking lunch, followed by panel discussions and candid, practical insight from Arnold &amp; Porter attorneys and fellow industry leaders, including:</p> <ul> <li>Angie Steele | SVP, US General Counsel of McDonald's Corporation</li> <li>Jon-Peter Kelly | SVP, General Counsel, Litigation &amp; Chief Compliance Officer of Walgreens</li> <li>Emily Newhouse Dillingham | Head of Legal of Better-For-You and Nature's Bakery Brands of Mars Snacking</li> <li>Kamran Khan | Vice President and Associate General Counsel of Altria</li> <li>Laura Kleinschmidt | Associate General Counsel of Kerry</li> </ul> <p>Hosted in our newly relocated Chicago office, the program will cover key legal and business challenges shaping these sectors, including:</p> <ul> <li>Recent Supreme Court and appellate decisions impacting the industry</li> <li>Regulatory developments from the CPSC, FDA, and other federal and state agencies, as well as an EPR update</li> <li>Enforcement trends, including DOJ priorities, the rise in state AG actions, and DA enforcement activity </li> <li>The good, the bad, and the ugly: tips for managing commercial agreements, commercial litigation, and distressed businesses</li> <li>Consumer products and retail trends, including product liability, commercial litigation, pricing, privacy, and AI</li> </ul> <p>A networking reception with drinks and passed hors d'oeuvres will follow. We look forward to seeing you in Chicago!</p>{00E9BEAD-10C0-4231-8290-B945B4714384}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/09/claire-reade-discusses-us-china-trade-dynamics-with-bloomberg-tv-and-cnbc-ahead-of-trumpxi-summitClaire Reade, Arnold &amp; Porter senior counsel and former Assistant U.S. Trade Representative for China Affairs, appeared on <em>Bloomberg TV&rsquo;s</em> &ldquo;Insight with Haslinda Amin&rdquo; and spoke with <em>CNBC </em>to discuss the state of U.S.-China trade relations ahead of the summit between President Trump and President Xi Jinping.Thu, 24 Sep 2026 00:00:00 -0500<p>Claire Reade, Arnold &amp; Porter senior counsel and former Assistant U.S. Trade Representative for China Affairs, appeared on <em>Bloomberg TV's</em> "Insight with Haslinda Amin" and spoke with <em>CNBC </em>to discuss the state of U.S.-China trade relations ahead of the summit between President Trump and President Xi Jinping.</p> <p>On <em>Bloomberg TV,</em> assessing reports that Xi may not bring a business delegation to the summit, Claire said the move signals the limited scope of deals likely to emerge from the visit, given how complicated it has become to encourage Chinese investment in the United States. She said, "It may also be an indication that he doesn't want to bring along companies where he's not going to be able to demonstrate progress in terms of breaking down barriers to the U.S. market."</p> <p>Claire also weighed in on the balance of leverage between the two countries, noting that Washington's read on Beijing's negotiating position has shifted over the course of the administration as officials have come to recognize the strength of China's hand. "That doesn't mean there isn't U.S. leverage, but I think it means the two sides are on a much more even footing when it comes to applying pressure," she said.</p> <p>Speaking separately with<em> CNBC,</em> Claire pointed to the current trade truce, set to expire in early November, as one specific area where the U.S. retains an advantage. "They're not going to want to let go of that leverage on the truce [by letting it] extend too far into the future," she said.</p> <p><a href="https://www.bloomberg.com/news/videos/2026-09-23/insight-with-haslinda-amin-9-23-2026-video">Watch the full <em>Bloomberg</em> interview.</a></p> <p><a href="https://www.cnbc.com/2026/09/21/trump-xi-china-summit-trade-tariffs.html">Read the full <em>CNBC </em>article.</a></p>{E81B4C98-2F18-4B33-8BAE-C5EF5904517B}https://www.arnoldporter.com/en/perspectives/news/2026/09/arnold-porter-advises-affinius-and-bh3-in-390m-construction-financingArnold &amp; Porter recently advised Affinius Capital LLC and BH3 Fund Advisors, LLC in the origination of a $310 million senior construction loan and an $80 million mezzanine loan, respectively, to Namdar Group.Thu, 24 Sep 2026 00:00:00 -0500<p>Arnold &amp; Porter recently advised Affinius Capital LLC and BH3 Fund Advisors, LLC in the origination of a $310 million senior construction loan and an $80 million mezzanine loan, respectively, to Namdar Group.</p> <p>The $390 million construction financing will be used for Park Tower, a 1,049-unit, 47-story multifamily development in Jersey City, New Jersey. The Jersey City Planning Board has approved the development.</p> <p>The Arnold &amp; Porter team was led by partners Steve Gliatta and Louis Hait, senior associate Gabrielle Raskin, and associate Rebecca Meisler.</p>{B2F6E58B-6C73-4957-B91E-2375B9764334}https://www.arnoldporter.com/en/perspectives/advisories/2026/09/promissory-fraud-puffery-and-earn-outs-delaware-court-of-chancery-provides-more-guidanceThomas Yadlonhttps://www.arnoldporter.com/en/people/y/yadlon-thomasthomas.yadlon@arnoldporter.comTracy A. Beltonhttps://www.arnoldporter.com/en/people/b/belton-tracy-atracy.belton@arnoldporter.comAs we have observed in our April 2026 Advisory regarding <em>Camaisa v. Pharmaceutical Research Associates, Inc.</em> and <em>Fortis Advisors LLC v. Johnson &amp; Johnson</em> and our July 2024 Advisory regarding <em>Trifecta Multimedia Holdings Inc. v. WCG Clinical Services LLC</em>, the Delaware courts have made it clear in cases involving earn-out disputes that buyers would be well advised to insist upon the inclusion of anti-reliance provisions in their favor in applicable acquisition agreements.Thu, 24 Sep 2026 00:00:00 -0500<p>As we have observed in our April 2026 Advisory regarding <em><a href="/en/perspectives/advisories/2026/04/earn-outs-and-other-forms-of-contingent-consideration"><em>Camaisa v. Pharmaceutical Research Associates, Inc.</em> and <em>Fortis Advisors LLC v. Johnson &amp; Johnson</em></a></em> and our July 2024 Advisory regarding <em><a href="/en/perspectives/advisories/2024/07/delaware-chancery-court-provides-guidance-in-trifecta">Trifecta Multimedia Holdings Inc. v. WCG Clinical Services LLC</a></em>, the Delaware courts have made it clear in cases involving earn-out disputes that buyers would be well advised to insist upon the inclusion of anti-reliance provisions in <em>their</em> favor in applicable acquisition agreements. Doing so should significantly hinder sellers&rsquo; ability to bring fraud claims following an earn-out failure based upon the invariably optimistic and aspirational discussions regarding post-closing performance and operational integration of the acquired business frequently occurring as part of pre-signing negotiations. The Delaware Court of Chancery&rsquo;s letter decision in <em>Shareholder Representative Services LLC v. Sphera Solutions, Inc.</em>[[N: <em>Shareholder Representative Services LLC v. Sphera Solutions, Inc.</em>, C.A. No. 2025-0174-DH (Del. Ch. Mar. 31, 2026).]] offers yet another circumstance reinforcing this conclusion, and also provides insights as to the common law predicate for its &ldquo;puffery&rdquo; analysis that we have previously discussed in connection with the <em>Trifecta</em>, <em>Camaisa</em>, and <em>Auris </em>decisions. </p> <p>The case also provides a useful reminder for transaction practitioners regarding the reimbursement of legal fees as part of indemnified losses. </p> <h2>Background</h2> <p><em>Sphera</em> arose out of the acquisition by Sphera Solutions, Inc. (Sphera), an ESG and risk management company, of SupplyShift Inc. (SupplyShift), a supply chain sustainability management services company. The merger consideration included an earn-out based upon SupplyShift&rsquo;s 2024 annual recurring revenue (Earn-Out Revenue) over an agreed threshold. The earn-out potentially represented close to half of the aggregate merger consideration. Shareholder Representative Services (SRD), acting in its capacity as representative of the former securityholders of SupplyShift, alleged in its complaint[[N: Verified Complaint, <em>Shareholder Representative Services LLC v. Sphera Solutions, Inc.</em>, C.A. No. 2025-0174-DH (Del. Ch. filed Feb. 17, 2025) [hereinafter Compl.].]] that SupplyShift agreed to the earn-out structure in reliance on a series of pre-closing representations by Sphera senior management regarding the post-closing operation of the acquired business. Such alleged representations included the following: (1) Sphera would market SupplyShift products to <em>all</em> of its 7,000 customers, (2) Sphera&rsquo;s prediction that all of its customers would have a need for SupplyShift&rsquo;s products; (3) Sphera would substantially increase SupplyShift&rsquo;s marketing budget and dedicate resources to cross-selling; (4) Sphera already had a &ldquo;substantial integration plan&rdquo; that it would implement immediately post-closing; and (5) a statement to the effect that successfully cross-selling SupplyShift&rsquo;s lowest-priced offering to only 7.5% of Sphera&rsquo;s customers would exceed the earn-out threshold, and that successfully cross-selling SupplyShift&rsquo;s average-priced offering to only 3% of Sphera&rsquo;s customers would have maximized the earn-out.[[N: Compl. &para;&para; 46, 49-54.]]</p> <p>Post-closing, Earn-Out Revenue allegedly fell well short of the earn-out threshold and the earn-out went unpaid. SupplyShift alleged that Sphera&rsquo;s post-closing conduct caused the shortfall, and was notably incompatible with Sphera&rsquo;s own pre-closing statements made in relation to post-closing integration, marketing, and cross-selling efforts.[[N: Compl. &para;&para; 20-21, 71-72.]] Of particular note, SupplyShift alleged that, before the merger agreement was executed, Sphera had already finalized its internal budget for the following year setting a 2024 annual recurring revenue goal more than $1 million below the $8.5 million threshold required for any earn-out payment, and otherwise demonstrated a marketing efforts commitment that was &ldquo;pre-engineered&rdquo; to guarantee that no earn-out would ever be paid. Sphera did not disclose this budget to SupplyShift during negotiation.[[N: Compl. &para;&para; 15-16.]]</p> <p>SRS brought fraud (both &ldquo;traditional&rdquo; and promissory fraud) and breach of contract claims against Sphera on behalf of SupplyShift&rsquo;s former securityholders. Sphera moved to dismiss the fraud count and breach of contract count relating to fee-shifting on a partial motion to dismiss. The motion to dismiss was denied by the court as to the fraud count and granted as to the fee-shifting breach of contract count.[[N: Consistent with the court&rsquo;s standard of review for the motion, all &ldquo;facts&rdquo; referenced in this Advisory are as alleged by SRS in its complaint (and have not been adjudicated).]]</p> <h2>Fraud Claims</h2> <p>The elements of a &ldquo;traditional&rdquo; fraud claim in Delaware are the same as those described in our prior Advisories: (1) a false representation, (2) the maker&rsquo;s knowledge of or belief in its falsity or reckless indifference to its truth, (3) an intention to induce action based on the representation, (4) justifiable reliance by the recipient on the representation, and (5) damages.&nbsp;</p> <p>With respect to the promissory fraud claim, the court noted that under Delaware law, statements that are &ldquo;merely promissory in nature and expressions as to what will happen in the future are not actionable as fraud.&rdquo;[[N: <em>Sphera</em>, at 14 (quoting <em>Grunstein v. Silva</em>, 2009 WL 4698541, at *13 (Del. Ch. Dec. 8, 2009)).]] Accordingly, promissory fraud claims require that a plaintiff show facts supporting a reasonable inference that the promisor had no intention of performing at the time the promise was made.</p> <p>While not expressly articulated as such in the cases discussed in our prior earn-out related Advisories, this additional requirement for promissory fraud appears to be part of the foundation for the Delaware courts&rsquo; treatment of statements considered &ldquo;puffery,&rdquo; i.e., the type of &ldquo;classically vague statements that a commercial party routinely makes during deal-making courtship&rdquo; that cannot support a fraud claim.[[N: <em>Sphera</em>, at 16 (quoting <em>Airborne Health, Inc. v. Squid Soap, LP</em>, 2010 WL 2836391, at *8 (Del. Ch. July 20, 2010)).]] It is implicit in the &ldquo;puffery&rdquo; determination that the maker of the optimistic statement in question actually believes in such statement, or at least believes in it enough such that they could not be seen as completely false. While other factors, such as the existence of a sophisticated commercial counterparty who would know better than to rely on such statements being literally true, apply as well, it seems difficult to expect that a court would consider a statement &ldquo;puffery&rdquo; where there was strong evidence that the maker actually believed the proposition in question was not remotely achievable.</p> <h2>&ldquo;Puffery&rdquo;</h2> <p>Consistent with the analysis in <em>Trifecta</em> and <em>Camaisa</em>, the court in <em>Sphera</em> began by identifying which of the alleged misrepresentations constituted non-actionable puffery. The court noted that &ldquo;a forward-looking statement falls outside the mere puffery &lsquo;safe harbor&rsquo; where it is both &lsquo;sufficiently specific&rsquo; and &lsquo;fraudulently conceived.&rsquo;&rdquo;[[N: <em>Sphera</em>, at 15 (quoting In re P3 Health Grp. Holdings, LLC, 2022 WL 15035833, at *3 (Del. Ch. Oct. 26, 2022) (citing <em>Trenwick Am. Litig. Trust v. Ernst &amp; Young, L.L.P.</em>, 906 A.2d 168, 208-09 (Del. Ch. 2006))).]]</p> <p>The court found that the following of Sphera&rsquo;s statements constituted puffery:</p> <ul> <li>Sphera&rsquo;s promise to cross-sell SupplyShift&rsquo;s products to &ldquo;<em>all</em> 7,000&rdquo;[[N: Emphasis included in the court&rsquo;s opinion.]] of its customers</li> <li>Sphera&rsquo;s prediction that all of its customers would have a need for SupplyShift&rsquo;s products</li> </ul> <p>The court noted that the first of these statements was &ldquo;textbook corporate optimism&rdquo; and that the second fell &ldquo;within the aegis of the &lsquo;classically vague statements that a commercial party routinely makes during deal-making courtship.&rsquo;&rdquo;[[N: <em>Sphera</em>, at 16-17 (citing <em>Trifecta Multimedia Holdings Inc. v. WCG Clinical Servs. LLC</em>, 318 A.3d 450, 464 (Del. Ch. 2024); quoting <em>Airborne Health, Inc. v. Squid Soap, LP</em>, 2010 WL 2836391, at *8 (Del. Ch. July 20, 2010)).]]</p> <p>The court found that Sphera&rsquo;s alleged promises to substantially increase SupplyShift&rsquo;s marketing budget and devote resources to cross-selling during the earn-out period satisfied the threshold for surviving a motion to dismiss because SupplyShift also alleged that Sphera had finalized its internal budget for the SupplyShift business line prior to making such statements at levels such that they could not have been true and Sphera&rsquo;s post-closing actions also called into question whether it believed such statements were true.&nbsp;</p> <h2>Reliance</h2> <p>Similar to the acquisition agreements covered in our <a href="/en/perspectives/advisories/2026/04/earn-outs-and-other-forms-of-contingent-consideration">April 2026</a>&nbsp;and <a href="/en/perspectives/advisories/2024/07/delaware-chancery-court-provides-guidance-in-trifecta">July 2024</a>&nbsp;Advisories, the merger agreement in Sphera included an integration clause but did not include non-reliance language from the seller, SupplyShift, for the benefit of the buyer, Sphera. Reviewing prior Delaware case law,[[N: We note that oral argument on the motion was held relatively soon following the publication of the Delaware Supreme Court&rsquo;s decision in <em>Johnson &amp; Johnson v. Fortis Advisors LLC</em> No. 490, 2024, 2026 WL 89452 (Del. Jan. 12, 2026). While the <em>Sphera</em> court was aware of that decision, citing it in a subsequent-history parenthetical to the Court of Chancery&rsquo;s <em>Fortis Advisors</em> opinion in the course of its puffery analysis, the court did not address it in connection with the non-reliance question. The extended discussion of prior case law on the non-reliance question arguably would not have been necessary for the <em>Sphera</em> court following such decision.]] the court observed that including a non-reliance clause would have allowed it to resolve the fraud claims premised on extracontractual representations in buyer&rsquo;s favor at a motion to dismiss stage, but that an integration clause would not. Noting the general principle that adjudication of reliance on a motion to dismiss (in the absence of an unmistakably worded non-reliance clause) is generally inappropriate, the court determined that SupplyShift had adequately pleaded the reliance prong.</p> <h2>Fraud by Omission</h2> <p>SRS advanced an alternative theory of fraud: fraud by omission. Specifically, that Sphera had an affirmative duty to disclose its pre-closing budget because it directly contradicted Sphera&rsquo;s (alleged) representations about marketing resources and cross-selling. The court allowed this theory to proceed as well on the basis that while parties to an arm&rsquo;s-length transaction have no affirmative duty to disclose material facts, where a party chooses to speak, it cannot speak &ldquo;partially or obliquely such that what the party conveys become[s] misleading.&rdquo; Because Sphera made commitments about cross-selling and marketing support while its contrary budget was already final, those statements could give rise to a duty to disclose the budget itself.&nbsp;</p> <h2>Breach of Contract/Fee-Shifting</h2> <p>The court granted Sphera&rsquo;s motion to dismiss SRS&rsquo; claim for attorneys&rsquo; fees under the Merger Agreement&rsquo;s indemnification provision, which required Sphera to indemnify SupplyShift&rsquo;s securityholders from losses &ldquo;owed to an unaffiliated third Person&rdquo; [and] &hellip; &ldquo;arising out of &hellip; any breach of, default in, or [Sphera&rsquo;s] failure to comply with any of the covenants or agreements&rdquo; in the Merger Agreement. SRS argued this provision covered fees incurred in prosecuting the litigation, given that Sphera had covenanted to make the earn-out payment and had allegedly breached that covenant.</p> <p>The court declined to read the provision as a fee-shifting clause for first-party litigation, emphasizing multiple times that there is a strong presumption in Delaware against fee shifting in indemnification provisions and that such fee shifting will only be recognized where there is a clear and unequivocal indication of the parties&rsquo; intent to cover first-party affirmative claims. As summarized by the court, under Delaware law, the following features are hallmarks of a fee-shifting intent:&nbsp;</p> <ol> <li>If there is indemnification for breaches that could not arise from a third-party claim</li> <li>If the definition of indemnifiable &ldquo;losses&rdquo; differentiates between third-party claims and non-third party claims</li> <li>If the notice requirements contemplate special or unique process requirements for third party claims</li> <li>If the relevant agreement does not provide for fee-shifting in other contexts</li> </ol> <p>These factors are to be analyzed together, without any feature having more weight than the other.&nbsp;</p> <p>The court analyzed the agreement in question and found that only the fee-shifting factor favored a finding of fee-shifting intent, while the language relating to the first two factors signaled the opposite. The court found that the existence of an indemnification loss notice provision allowing for notice of indemnification claims, even where there has been no third party claim, to be neutral and did not necessarily mean that first party claims were covered (while noting Delaware&rsquo;s bias against fee-shifting). Noting in particular language in the agreement the existence of asymmetrical language which seemed to very clearly indicate the intent to limit indemnification to third party claims for claims by SupplyShift but not for claims by Sphera, the court dismissed the fee shifting count.</p> <h2>Key Takeaways</h2> <ul> <li>In our view, anti-reliance clauses in the buyer&rsquo;s favor should become the default position for buyers in acquisition agreements with earn-outs going forward. Case after case in Delaware indicates or strongly implies that a well-written anti-reliance clause in favor of the buyer would have eliminated the seller&rsquo;s earn-out fraud claims premised on alleged extra contractual representations.&nbsp;</li> <li>We would go further and suggest that the inclusion of a short form anti-reliance concept is worth including in commercial agreements outside of the M&amp;A context where a party makes a relatively undefined &ldquo;efforts&rdquo; (or other similar generally defined performance) commitment while having contemporaneous discussions with the counterparty about what exactly those efforts (or that commitment) will mean in practice. We do not see a reason why the result should be any different in a commercial agreement than in an acquisition agreement.&nbsp;</li> <li>The puffery determination remains a &ldquo;know it when I see it&rdquo; test that resists well-defined guidance for future application. The court found that Sphera&rsquo;s promise to cross-sell to &ldquo;<em>all</em> 7,000&rdquo; customers was mere puffery, but never explained why that promise was not a serious, intended commitment. Nothing in the opinion suggests that marketing to all 7,000 customers was infeasible; if anything, Sphera&rsquo;s own alleged representations about the percentage of its customer base needed to clear the earn-out threshold suggest that significant cross-selling was viewed as realistic. In our view, the court&rsquo;s basis for distinguishing the &ldquo;all customers&rdquo; statement from the more specific, quantified promises is not developed in the opinion. The result may be correct, but the reasoning, as written, is closer to assertion than analysis.&nbsp;</li> <li>Puffery and reliance are not the only battlegrounds in an earn-out fraud case; a fraud-by-omission theory gives the seller another potential line of attack. A buyer generally need not volunteer material information during an arm&rsquo;s-length negotiation. But under Delaware law, a party that chooses to speak on a subject may not make a materially misleading partial disclosure. Applying that principle at the pleading stage, the Sphera court found that the alleged statements about marketing support and cross-selling, viewed together with the allegedly contrary budget that had already been finalized, were sufficient to support an omission-based fraud claim.</li> <li>Parties should draft indemnification provisions on the assumption that a Delaware court will read them against first-party fee shifting. The presumption did substantial work in <em>Sphera</em>, and appeared to shape how the court resolved ambiguous language within the hallmark&rsquo;s framework. A party expecting the indemnification provision to extend to its own enforcement costs against the counterparty should insist on express (and even redundant) clarity at the expense of drafting elegance.&nbsp;</li> </ul> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{A9B9F4D1-3DC1-41E7-9F7E-A6188FE7B840}https://www.biosliceblog.com/2026/09/final-text-of-the-reform-to-the-eu-regulatory-framework-for-medicinal-products-published/Libby Amos-Stonehttps://www.arnoldporter.com/en/people/a/amos-libbylibby.amos-stone@arnoldporter.comAlexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comCarla Schoonderbeekhttps://www.arnoldporter.com/en/people/s/schoonderbeek-carlaCarla.Schoonderbeek@arnoldporter.comAdela Williamshttps://www.arnoldporter.com/en/people/w/williams-adelaadela.williams@arnoldporter.comHeba Jalilhttps://www.arnoldporter.com/en/people/j/jalil-hebaheba.jalil@arnoldporter.comThu, 24 Sep 2026 00:00:00 -0500{D63C738F-6159-4EF9-8F29-981BEBABD46E}https://www.arnoldporter.com/en/perspectives/events/2026/09/uk-eu-life-sciences-conferenceArnold &amp; Porter is pleased to invite you to a complimentary Annual UK &amp; EU Life Sciences Conference.Wed, 23 Sep 2026 00:00:00 -0500<p>Arnold &amp; Porter is pleased to invite you to our complimentary Annual UK &amp; EU Life Sciences Conference taking place on Wednesday, September 23.</p> <p>This full-day conference is aimed at in-house regulatory and legal counsel and will cover recent regulatory developments in the UK and EU, including:</p> <ul> <li>EU Pharma package: latest developments and status</li> <li>Use of IVDs in clinical trials</li> <li>Practical applications of AI for pharma companies</li> <li>Privacy update EU and UK</li> <li>U.S. MFN policies; implications for EU/UK companies</li> <li>Reflections on first Joint Clinical Assessments under the EU HTA Regulation</li> <li>UK tenders under the Procurement Act 2023</li> </ul> <h2>Participation</h2> <p>The Arnold &amp; Porter UK &amp; EU Annual Life Sciences Conference is an event that provides updates, training, and networking opportunities for in-house senior lawyers in the life sciences industry. However, all seniorities are welcome &mdash; please feel free to pass this to colleagues who might be interested in attending.</p> <p>We hope you will be able to join us for this in-person event, with opportunities for questions and networking throughout the day.</p>{5C41C0BF-B86A-4335-B52E-805BF1857332}https://www.arnoldporter.com/en/perspectives/events/2026/09/deal-to-dispute-before-the-ink-dries-managing-risk-in-early-stage-negotiationsRandall H. Millerhttps://www.arnoldporter.com/en/people/m/miller-randall-hrandy.miller@arnoldporter.comCarlyn S. Williamshttps://www.arnoldporter.com/en/people/w/williams-carlyn-scarlyn.williams@arnoldporter.comAlyssa S. Hoganhttps://www.arnoldporter.com/en/people/h/hogan-alyssa-salyssa.hogan@arnoldporter.comEarly-stage negotiations often move on assumptions of good faith and routine paperwork, but the choices parties make before a deal is signed can shape how deal risk turns into litigation risk later.Wed, 23 Sep 2026 00:00:00 -0500<p>Early-stage negotiations often move on assumptions of good faith and routine paperwork, but the choices parties make before a deal is signed &ndash; in non-disclosure agreements, letters of intent, and the negotiations themselves &ndash; can shape how deal risk turns into litigation risk later. We invite you to a webinar on litigation risk in early-stage negotiations.</p> <h2>This session will cover:</h2> <ul> <li>Common gaps in NDA drafting that lead to disputes over confidentiality and use of information</li> <li>Whether and when a letter of intent becomes binding, and how courts have interpreted non-binding language</li> <li>Other points in the negotiation process &ndash; exclusivity provisions, term sheets, conduct during exclusivity or diligence &ndash; where exposure can arise before a definitive agreement exists</li> <li>Practical drafting and negotiation approaches to reduce litigation risk across early-stage deal documents</li> </ul> <p>This program is designed for in-house counsel, litigators, corporate and transactional attorneys, compliance professionals, and business leaders involved in structuring, negotiating, overseeing, or litigating commercial transactions.</p>{36E3A6C2-0D7F-4B74-B6C1-80083D49C66A}https://www.arnoldporter.com/en/perspectives/news/2026/09/iam-wtr-copyright-1000-2026-recognizes-arnold-porters-copyright-capabilitiesThe inaugural edition of the <em>Copyright 1000: The World's Leading Copyright Professionals</em>, published across <em>IAM </em>and <em>World Trademark Review (WTR)</em>, recognized six Arnold &amp; Porter lawyers for their copyright work nationally across California, Illinois, and New York.Wed, 23 Sep 2026 00:00:00 -0500<p>The inaugural edition of the <em>Copyright 1000: The World's Leading Copyright Professionals</em>, published across <em>IAM </em>and <em>World Trademark Review (WTR),</em> recognized six Arnold &amp; Porter lawyers for their copyright work nationally across California, Illinois, and New York. The Copyright 1000 is a new global guide focused exclusively on copyright law and practice, identifying the leading copyright firms and practitioners across key jurisdictions worldwide.</p> <p>Arnold &amp; Porter received the following firm rankings in the 2026 <em>Copyright 1000</em> guide:</p> <ul> <li>United States: National&mdash;Bronze</li> <li>United States: California&mdash;Bronze</li> <li>United States: Illinois&mdash;Bronze</li> <li>United States: New York&mdash;Bronze</li> </ul> <p>The following lawyers were recognized in the 2026 <em>Copyright 1000</em> guide:</p> <ul> <li>Dori Ann Hanswirth&mdash;Recommended (United States: New York)</li> <li>Michael Harris&mdash;Recommended (United States: Illinois)</li> <li>Theresa House&mdash;Recommended (United States: New York)</li> <li>Thomas Magnani&mdash;Recommended (United States: California)</li> <li>Christopher Renk&mdash;Recommended (United States: Illinois)</li> <li>Rhonda Trotter&mdash;Recommended (United States: California)</li> </ul>{04246DEB-9CFC-41AB-ADE3-B38427A3F5D7}https://www.csha.info/?pg=TheWeekly&pubAction=viewIssue&pubIssueID=74190&pubIssueItemID=495553Michael C. Woodhttps://www.arnoldporter.com/en/people/w/wood-michael-cmichael.wood@arnoldporter.comGina M. Cavalierhttps://www.arnoldporter.com/en/people/c/cavalier-gina-mgina.cavalier@arnoldporter.comWed, 23 Sep 2026 00:00:00 -0500{C6A6253C-F34F-4A46-BDB8-76939B3F378C}https://www.arnoldporter.com/en/perspectives/advisories/2026/09/sec-proposes-proxy-solicitation-modernizationSara Adlerhttps://www.arnoldporter.com/en/people/a/adler-sarasara.adler@arnoldporter.comJoel I. Greenberghttps://www.arnoldporter.com/en/people/g/greenberg-joel-ijoel.greenberg@arnoldporter.comOn September 16, 2026, the SEC proposed amendments to modernize certain rules related to proxy solicitations. The proposed amendments would: (i) eliminate the annual report delivery requirement; (ii) eliminate the requirement to send the proxy statement at least 20 business days before the meeting date if it incorporates information by reference; (iii) eliminate the requirement to submit a notice regarding exempt solicitations; (iv) reduce the minimum broker search period from 20 business days to five business days; (v) require the inclusion of contact information on proxy and information statement cover pages; and (vi) revise various rules and forms to reflect such amendments, as well as to correct certain technical errors. Comments should be submitted on or before November 20, 2026.Wed, 23 Sep 2026 00:00:00 -0500<p>On September 16, 2026, the SEC <a rel="noopener noreferrer" href="https://www.sec.gov/files/rules/proposed/2026/33-11439.pdf" target="_blank">proposed</a> amendments to modernize certain rules related to proxy solicitations. The proposed amendments would: (i) eliminate the annual report delivery requirement; (ii) eliminate the requirement to send the proxy statement at least 20 business days before the meeting date if it incorporates information by reference; (iii) eliminate the requirement to submit a notice regarding exempt solicitations; (iv) reduce the minimum broker search period from 20 business days to five business days; (v) require the inclusion of contact information on proxy and information statement cover pages; and (vi) revise various rules and forms to reflect such amendments, as well as to correct certain technical errors. Comments should be submitted on or before November 20, 2026.</p> <h2>Elimination of Requirement to Deliver Annual Reports</h2> <p>Under Exchange Act Rule 14a-3(b), if a proxy solicitation relates to an annual or special meeting of shareholders at which directors are to be elected, or a written consent in lieu of such meeting, the proxy statement must be accompanied or preceded by an annual report to security holders which contains specified disclosures. Many registrants do not produce a separate annual report and send shareholders copies of their Form 10-K (often with a &ldquo;wrap&rdquo; providing limited additional information not required in Form 10-K) to satisfy this requirement. </p> <p>Under the proposed amendments to Rule 14a-3, the annual report delivery requirement would be eliminated and proxy statements for shareholder meetings at which directors will be elected would instead need to be preceded by either: (i) the filing of the registrant&rsquo;s Form 10-K for the registrant&rsquo;s most recent fiscal year on EDGAR, or (ii) the furnishing on EDGAR of an annual report to security holders that meets the requirements set out in the rule. The proposed content, formatting, and submission requirements would be largely unchanged, with the elimination of disclosures in the annual report to security holders that go beyond what is required in the Form 10-K or that would be available in a different registrant filing.[[N: i.e., the performance graph, changes and disagreements with accountants, certain disclosures with respect to directors and executive officers.]] The proposed rules, however, would not prevent registrants from voluntarily sending Rule 14a-3 annual reports to security holders in connection with shareholder meetings, provided that they also furnish such reports on EDGAR. Given the ease with which investors can access stock performance information on the internet, the proposal would also eliminate Regulation S-K Item 201(e)&rsquo;s requirement to include a stock performance graph for all registrants other than investment companies (to maintain parity with other regulated funds). </p> <h2>Elimination of Delivery Deadline When Documents Are Incorporated By Reference Into the Proxy Statements</h2> <p>Note D.3 to Schedule 14A requires registrants to send proxy statements to shareholders no later than 20 business days prior to the shareholder meeting date if a document or portion of a document, other than an annual report to security holders, is incorporated by reference into the proxy statement. If no meeting is held, proxy statements that incorporate information must be sent at least 20 business days prior to the date that the votes, consents, or authorizations may be used to effect the corporate action. Form S-4 and Form F-4 contain a similar minimum 20-business-day period requirement when sending a prospectus to securityholders prior to a securityholder meeting if a registrant incorporates by reference into the form information about the registrant or the company being acquired. Since the incorporated information is readily available to shareholders without charge on EDGAR, and can also be delivered electronically, the SEC sees little purpose for these minimum 20-business-day requirements and proposes to eliminate them.</p> <h2>Elimination of Requirement to Submit Notice of Exempt Solicitation</h2> <p>Certain types of solicitations are exempt from most of the Federal proxy rules, including solicitations where the person does not seek authority to act as proxy and does not furnish or request a form of revocation, abstention, consent, or authorization. Exchange Act Rule 14a-6(g) contains a requirement to furnish to the SEC a Notice of Exempt Solicitation for exempt solicitations conducted in writing by certain large shareholders (those that beneficially own more than $5 million of a registrant&rsquo;s securities) if not already publicly available. The proposal would rescind Rule 14a-6(g) and the Notice of Exempt Solicitation as no longer meaningful, as recent submissions have been voluntary by under-$5 million beneficial owners. Although the SEC notes that there may be some benefit to shareholders being able to access the communications of other shareholders in a centralized manner, &ldquo;the voluntary submission of Notices of Exempt Solicitation permits submitting shareholders, whose views do not necessarily represent the views of other shareholders, to disseminate their views inexpensively and prominently on EDGAR, which was not the intended purpose of Rule 14a-6(g).&rdquo; The SEC notes that since the Division of Corporation Finance updated its guidance in January 2026 to state that it will object to voluntary submissions of Notices of Exempt Solicitation, market participants have created third-party websites that list and provide access to exempt solicitations, and shareholders often broadcast exempt solicitations via press release.</p> <h2>Shortening the Minimum Broker Search Period</h2> <p>Registrants are required pursuant to current Exchange Act Rule 14a-13 to inquire of their record holders by means of a search card or otherwise the number of proxy materials they need to forward to their customers who are beneficial owners of the registrant&rsquo;s securities. Currently, the rule requires registrants to request this information at least 20 business days prior to the record date for the annual or special meeting. Given technological advancements, the proposal would amend Rule 14a-13 to shorten the minimum broker search period from 20 business days to five business days.</p> <h2>Requiring Contact Information on Proxy Statement and Information Statement Cover Pages and Other Technical Proposed Amendments</h2> <p>The proposal would revise the cover pages of Schedule 14A and Schedule 14C to require the inclusion of contact information (name, address, and phone number) for a representative who can respond to questions or comments regarding the filing, as is already required by many other SEC forms. The address may be an electronic mail address.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{573E56A4-3335-45FF-920D-8FD25E525A96}https://go.ccwcevents.com/files/HeArFsZtUU9FnPxd2G6zJQk3gvhEnBUFsheena.thomas@arnoldporter.comWed, 23 Sep 2026 00:00:00 -0500{7A42D31E-E1BA-4031-9C44-B0F012B2D740}https://www.arnoldporter.com/en/perspectives/news/2026/09/law360-names-arnold-porters-seattle-office-a-2026-regional-powerhouse-in-washingtonArnold &amp; Porter&rsquo;s Seattle office has been named a 2026 Regional Powerhouse in Washington by<em> Law360, </em>one of only two firms selected in the state. The annual series honors firms driving key legal and business trends in their regions. Law360 highlighted Washington firms for their work on technology-related matters, including artificial intelligence, user privacy, and independent-contractor classification, as well as real estate development litigation and employment matters involving the City of Seattle and private industry.Tue, 22 Sep 2026 00:00:00 -0500<p>Arnold &amp; Porter's Seattle office has been named a 2026 Regional Powerhouse in Washington by<em> Law360,</em> one of only two firms selected in the state. The annual series honors firms driving key legal and business trends in their regions. <em>Law360 </em>highlighted Washington firms for their work on technology-related matters, including artificial intelligence, user privacy, and independent-contractor classification, as well as real estate development litigation and employment matters involving the City of Seattle and private industry.</p> <p>The recognition comes just over a year after Arnold &amp; Porter opened its Seattle office in July 2025, capping what <em>Law360</em> called the office's "whirlwind inaugural year in the Pacific Northwest's tech capital." Since opening, the team has built a growing presence in a region anchored by global and emerging companies in technology, healthcare, and other innovation-driven industries. <em>Law360</em> noted that the office grew at a "blistering pace," while "juggling an array of employment matters for the city and scoring legal victories for other major corporate clients," including the national healthcare and hospital system Providence. The publication stated that the "physical growth of the downtown Seattle location reflects Arnold &amp; Porter's widening Washington state footprint," culminating in an upcoming move into a new 39,000-square-foot office in December 2026.</p> <p>The office is led by Pallavi Mehta Wahi, who also serves as the firm's chair of Western U.S. Strategic Growth. Pallavi was joined by partners Annette Becker, Marisa Bocci, and Mark Filipini in speaking with <em>Law360</em> about the recognition. In <em><em><a href="/-/media/files/perspectives/news/2026/washington-powerhouse-arnold--porter.pdf?rev=64d159ce3614485b8d179788191ec898&amp;hash=89B3C78DA7AE6BEFE10458BE65A30297"><em>Law360's</em> profile</a></em></em>, Pallavi noted that "Seattle is a growing, incredible region of business, which houses some of the world headquarters of major companies in sectors where Arnold &amp; Porter really does have major expertise." She further noted that "Arnold &amp; Porter's prowess in regulatory and government-facing matters fits the needs of the firm's clients in Washington &mdash; especially those driven by innovation." <em>Law360 </em>went on to state that the firm's Seattle office brings together many attorneys who have "been practicing locally for decades and have cultivated relationships with the city as its need for sophisticated legal counsel has grown."</p> <p><em>Law360's</em> profile further mentioned the Seattle team's work on sophisticated technology transactions and counseling related to artificial intelligence, privacy, data, intellectual property, competition, and regulatory issues, and featured the office's representation of public- and private-sector clients in employment matters, a significant consumer-protection litigation victory, and real estate financing and leasing work across Washington.</p> <div style="padding:56.25% 0 0 0;position:relative;"><iframe src="https://player.vimeo.com/video/1229257478?dnt=1&amp;h=bc5661184d&amp;badge=0&amp;autopause=0&amp;player_id=0&amp;app_id=58479" frameborder="0" allow="autoplay; fullscreen; picture-in-picture; clipboard-write; encrypted-media; web-share" referrerpolicy="strict-origin-when-cross-origin" style="position:absolute;top:0;left:0;width:100%;height:100%;" title="Seattle Power House"></iframe></div>{443D588F-9DA7-4374-B3F4-98BFF52FD7B5}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/09/dan-kracov-discusses-pharmas-biosecure-act-compliance-timeline-for-lexology-proDan Kracov, chair of Arnold &amp; Porter's Global Life Sciences Industry group, was quoted in the recent <em>Lexology Pro</em> article, "The BIOSECURE Act Has a Long Runway, but Pharma GCs Don't," which examined the BIOSECURE Act's phased restrictions on procuring biotechnology equipment and services from Chinese suppliers, and the steps pharmaceutical general counsel should take before the rules are finalized.Tue, 22 Sep 2026 00:00:00 -0500<p>Dan Kracov, chair of Arnold &amp; Porter's Global Life Sciences Industry group, was quoted in the recent <em>Lexology Pro</em> article, "The BIOSECURE Act Has a Long Runway, but Pharma GCs Don't," which examined the BIOSECURE Act's phased restrictions on procuring biotechnology equipment and services from Chinese suppliers, and the steps pharmaceutical general counsel should take before the rules are finalized.</p> <p>Although the law's Federal Acquisition Regulation (FAR) revision isn't expected until around 2028, Dan said companies shouldn't wait for it to start preparing. "The FAR revision should be treated as a decision point for implementation, and not the point at which to start preparing for the applicability of the Act," he said.</p> <p>Dan also noted that while the Act's five-year transition period allows some existing contracts with designated suppliers to continue, companies should contract for anticipated work and negotiate relevant options before the effective date, since adding new activities later may not be permitted.</p> <p><a href="https://www.lexology.com/pro/content/the-biosecure-act-has-long-runway-pharma-gcs-dont">Read the full article</a> (subscription required).</p>{455893A1-FEC6-4ABC-9E9A-45DA91FA25FB}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/09/beatriz-san-martin-weighs-in-on-eus-ip-valuation-framework-plans-in-law360Arnold &amp; Porter partner Beatriz San Martin was quoted in the recent Law360 article, "EU IP Valuation Plan Spurs Patent Expertise Concerns," examining industry skepticism over the European Union Intellectual Property Office's (EUIPO) capacity to value patent portfolios under a newly proposed innovation framework.Tue, 22 Sep 2026 00:00:00 -0500<p>Arnold &amp; Porter partner Beatriz San Martin was quoted in the recent <em>Law360 </em>article, "EU IP Valuation Plan Spurs Patent Expertise Concerns," examining industry skepticism over the European Union Intellectual Property Office's (EUIPO) capacity to value patent portfolios under a newly proposed innovation framework.</p> <p>The article covers the European Commission's proposed Innovation Act, which would task the EUIPO with creating a common framework for valuing intellectual property to help start-ups and scale-ups secure funding. Beatriz cautioned that the initiative could backfire if the resulting valuations are not grounded in realistic assessments.</p> <p>"I'm not sure it ultimately helps either the start-ups or investors," she said. "If things have been massaged in such a way that they are not realistic, it could then negatively impact that whole market and there would be no confidence in any of the valuations."</p> <p><a href="https://www.law360.com/articles/2527215/eu-ip-valuation-plan-spurs-patent-expertise-concerns-">Read the full article</a> (subscription required).</p>{9C75184A-E405-438B-A254-8C9982E2F16A}https://www.arnoldporter.com/en/perspectives/advisories/2026/09/sec-proposes-to-rescind-rule-14a-8-amend-rule-14a-4-and-amend-other-proxy-rulesSara Adlerhttps://www.arnoldporter.com/en/people/a/adler-sarasara.adler@arnoldporter.comJoel I. Greenberghttps://www.arnoldporter.com/en/people/g/greenberg-joel-ijoel.greenberg@arnoldporter.comOn September 16, 2026, the SEC proposed, among other things, to eliminate its rules granting shareholders the right to require the inclusion of certain of their proposals for shareholder action in the company&rsquo;s proxy statement, leaving the authority to create and define such a right to state corporate law and each company&rsquo;s governing documents.&nbsp;Comments on the proposal must be received on or before November 20, 2026.Tue, 22 Sep 2026 00:00:00 -0500<p>On September 16, 2026, the SEC <a rel="noopener noreferrer" href="https://www.sec.gov/files/rules/proposed/2026/34-106383.pdf" target="_blank">proposed</a>, among other things, to eliminate its rules granting shareholders the right to require the inclusion of certain of their proposals for shareholder action in the company&rsquo;s proxy statement, leaving the authority to create and define such a right to state corporate law and each company&rsquo;s governing documents. Specifically, the proposal would: (i) rescind Exchange Act Rule 14a-8; (ii) amend Exchange Act Rule 14a-4 to expand the circumstances under which a company may exercise, with respect to proxies it receives, discretionary voting authority on proposals that will be presented at a shareholder meeting but not included in the company&rsquo;s proxy materials; and (iii) amend other proxy rules to facilitate the implementation of the foregoing.&nbsp;Comments on the proposal must be received on or before November 20, 2026.</p> <h2>Exchange Act Rule 14a-8</h2> <p>The conduct of shareholder meetings, including how proposals are presented, is governed by state law. The predecessor to Rule 14a-8, as originally adopted in 1942, was intended to facilitate the ability of shareholders under state law to present certain proposals for consideration at a company&rsquo;s annual or special meeting. Over time, however, various amendments to the rule have increased the SEC&rsquo;s role in &ldquo;defining and interpreting standards that implicate core state law corporate governance matters, such as shareholder voting rights.&rdquo; As stated in the proposal, the rule currently operates &ldquo;as a substantive Federal overlay that improperly intrudes into matters of state law by dictating that companies include (or allowing them to exclude) certain shareholder proposals in the companies&rsquo; proxy materials.&rdquo; As the conditions and exclusions in the rule &ldquo;bear little or no connection to whether the proposal is proper for a shareholder vote at the shareholder meeting under state law,&rdquo; the SEC is proposing to rescind the rule as exceeding its statutory authority &ldquo;by improperly intruding into state law without express authorization from Congress.&rdquo; The SEC further notes that even if all or a portion of the rule were within its statutory authority, there are independent policy reasons for recission, including that: (i) the original justifications for the rule &ldquo;have not been substantiated in practice or are less compelling today;&rdquo;[[N: The proposal cites as evidence that when the rule was first adopted, the costs of inclusion of shareholder proposals were small; many proposals had meaningful management or shareholder support; the volume of proposals was low; and state law was thought to be reasonably clear &mdash; all of which no longer appear to be the case.]] (ii) the rule has had unjustified unintended consequence;[[N: The proposal notes that proponents often use Rule 14a-8 as leverage for private negotiations with companies, while management may find it advantageous to settle with proponents if their proposals are withdrawn.]] and (iii) even if authorized by law, the rule represents unwarranted &ldquo;entanglement in state law issues.&rdquo; The SEC believes that rescinding the rule would eliminate any federal law preemption implications, or any other disincentive for states to develop their own laws governing shareholder proposals. As a result, if the proposal is adopted, state law or, to the extent permitted by state law, a company&rsquo;s governing documents, would determine whether a shareholder proposal would be required to be included in a company&rsquo;s proxy materials.</p> <h2>Exchange Act Rule 14a-4</h2> <p>Rule 14a-4(c) addresses the circumstances under which a proxy card submitted by a shareholder may confer discretionary voting authority on the proxyholder for matters not included on the proxy card. Rule 14a-4(c)(1) permits such discretionary voting at an annual meeting on matters for which the company did not receive timely notice (45 days before the date on which the company first mailed its proxy materials for the prior year&rsquo;s annual meeting, or otherwise, in accordance with an applicable advance notice bylaw provision), provided that a specific statement that such discretionary authority is granted is included in the company&rsquo;s proxy statement or form of proxy, and Rule 14a-4(c)(2) permits such discretionary voting at an annual meeting on matters which the company did receive timely notice, if the company&rsquo;s proxy statement includes &ldquo;advice&rdquo; on the nature of the matter and how such discretion will be exercised, unless the proponent solicits a sufficient number of shareholders in accordance with the rule. Rule 14a-4(c)(3)-(7) describes additional matters on which a proxy may confer discretionary authority.</p> <p>The SEC notes that companies may feel compelled to include certain shareholder proposals received outside of Rule 14a-8 on their proxy cards (i.e., all proposals if that rule is rescinded), even where not required, in order to seek and exercise proxy voting authority on the proposal. To address this issue, under the proposal, Rule 14a-4(c)(2) would be amended to no longer prohibit a company from exercising discretionary voting authority with respect to timely received shareholder proposals submitted outside the Rule 14a-8 process, regardless of whether the proponent delivers its own proxy materials to requisite shareholders, so long as the company includes: (i) a brief description of the matter in its proxy statement[[N: For example, &ldquo;a non-binding proposal from a pension fund that the company adopt a proxy access bylaw provision.&rdquo;]] and how the company intends to use its discretionary authority; (ii) a cross-reference on the proxy card to the location of this disclosure; and (iii) a check box on the proxy card that, if checked, would prevent the company from exercising its discretion with respect to their individual shares.&nbsp;</p> <p>As a result, a proponent&rsquo;s proxy card could include the company&rsquo;s nominees, management proposals, and the proponent&rsquo;s proposals, while the company&rsquo;s card could include only the company&rsquo;s nominees and management proposals. The company could then exercise discretionary voting authority to vote proxies it receives against the proponent&rsquo;s proposals, other than proxy cards where the box is checked. Although only one check box would be required, a company could voluntarily provide multiple check boxes for multiple non-management proposals subject to discretionary voting authority.</p> <h2>Other Proposed Amendments</h2> <p>Rule 14a-4(c) would be clarified to state that discretionary voting authority only relates to matters that are not included on the proxy card, and Rule 14a-4(c)(1) would be amended to clarify that a company&rsquo;s advance notice provision, or an applicable state or foreign law provision, determines whether a company has received &ldquo;timely&rdquo; notice of a matter, and, only in the absence of such a provision would the default deadline under Rule 14a-4(c)(1) (i.e., the 45 day rule) apply. Rule 14a-4(c)(1) would also be amended to provide that if during the prior year the registrant did not hold an annual meeting, or if the date of the meeting has changed more than 30 days from the prior year, then notice must not have been received a reasonable time before the registrant sends its proxy materials for the current year (unless a provision of applicable state or foreign law or the registrant&rsquo;s governing documents establishes an applicable deadline for such notice, in which case such deadline applies).</p> <p>The SEC is proposing to delete Rule 14a-4(c)(6), which currently states that a proxy may confer discretionary authority to vote on any proposal omitted from the proxy statement and form of proxy pursuant to 14a-8 or 14a-9 (prohibition against false or misleading statements in proxy materials), as Rule 14a-8 is proposed to be rescinded, and retaining the provision with only a reference to Rule 14a-9 may further expand the ability of companies to use discretionary voting authority without providing the disclosure required by proposed Rule 14a-4(c)(2).</p> <p>Rule 14a-5(e) requires certain deadlines to be disclosed in all proxy statements. If Rule 14a-8 is rescinded, Rule 14a-5(e)(1) and (2) would be amended to eliminate references to Rule 14a-8. The deadline to be disclosed under proposed amended Rule 14a-5(e)(2) would be the deadline established under an applicable state or foreign law provision or the company&rsquo;s governing documents, or, in the absence of such a provision, the default deadline under Rule 14a-4(c)(1).</p> <p>Rule 14a-5(f) is proposed to be amended to require disclosure of changed deadlines under any applicable provision of Rule 14a-5(e), including deadlines for submitting nominees for inclusion in the registrant&rsquo;s proxy statement and form of proxy, and for providing notice of a solicitation of proxies in support of director nominees other than the registrant&rsquo;s nominees pursuant to Rule 14a-19 for the registrant&rsquo;s next annual meeting (unless the registrant is a registered investment company or a business development company).</p> <p>Rule 14a-6(a), which governs when preliminary proxy statements are required, is proposed to be amended to provide that a company need not file a preliminary proxy statement solely because of the submission of a shareholder proposal, unless such shareholder proposal (or the company&rsquo;s election of directors) is known or reasonably should be known to the company to involve a &ldquo;solicitation in opposition,&rdquo; including any solicitation (other than a solicitation exempt under Rule 14a-2): (i) subject to Rule 14a-19; (ii) to vote against or withhold votes from any of the registrant&rsquo;s director nominee(s); (iii) to vote against a proposal that the registrant expressly supports in its proxy materials; and (iv) to vote in support of a proposal that the registrant does not expressly support in its proxy materials.[[N: Related amendments are proposed to Rule 14c-5(a), which covers preliminary information statements.]]</p> <p>The proposal would also remove Item 4 from Schedule 14C and amend Rule 14c-5(a) to remove the references to Item 4. Currently, if a company will distribute a required information statement and a shareholder has submitted a proposal for action at the shareholder meeting a reasonable time before the company distributes the information statement, the company must &ldquo;make a statement to that effect, identify the proposal and indicate the disposition proposed to be made of the proposal by the [company] at the meeting.&rdquo; If Rule 14a-8 is rescinded and Rule 14a-4(c)(2) is amended as proposed, the only circumstance in which a company would be expressly required by the Federal proxy rules to identify or describe a shareholder proposal in its proxy materials would be if the company is seeking to exercise discretionary voting authority with respect to a proposal not included on its proxy card under proposed Rule 14a-4(c)(2). Since this would not apply to an information statement, Item 4 of Schedule 14C would be removed, so that shareholders receiving proxy statements and information statements receive equivalent information.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{D17DDB22-10B6-4D83-8FA9-490A2527C641}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/09/jonathan-martel-talks-epa-climate-rollback-timeline-in-law360Jonathan Martel, co-chair of Arnold &amp; Porter&rsquo;s Environmental practice group and a former attorney at the U.S. Environmental Protection Agency&rsquo;s (EPA) Office of General Counsel, was quoted in the recent <em>Law360</em> article, &ldquo;EPA&rsquo;s Policy Repeals May Spell Exit From Climate Regulation,&rdquo; discussing the EPA&rsquo;s latest proposal to eliminate greenhouse gas regulation for the power sector and whether the agency&rsquo;s legal rationale will withstand judicial review.Mon, 21 Sep 2026 00:00:00 -0500<p>Jonathan Martel, co-chair of Arnold &amp; Porter&rsquo;s Environmental practice group and a former attorney at the U.S. Environmental Protection Agency&rsquo;s (EPA) Office of General Counsel, was quoted in the recent <em>Law360 </em>article, &ldquo;EPA&rsquo;s Policy Repeals May Spell Exit From Climate Regulation,&rdquo; discussing the EPA&rsquo;s latest proposal to eliminate greenhouse gas regulation for the power sector and whether the agency&rsquo;s legal rationale will withstand judicial review.</p> <p>Jonathan noted that with initial briefs not yet filed in the pending D.C. Circuit litigation, and the EPA&rsquo;s own proposal not expected to be finalized until next year, the question of the agency&rsquo;s authority is likely to remain unresolved for some time. He pointed to the timeline itself as the central uncertainty.</p> <p>&ldquo;The issue is: does that get resolved before a new administration in 2029?&rdquo; he said.</p> <p><a href="https://www.law360.com/articles/2526146/epa-s-policy-repeals-may-spell-exit-from-climate-regulation">Read the full article</a> (subscription required).</p>{D0690E14-C03B-4D63-933D-F79ECD4BC719}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/09/gary-schall-speaks-at-startup-boston-week-2026-covered-in-boston-business-journal<span>Gary Schall, co-head of Arnold &amp; Porter&rsquo;s Emerging Companies &amp; Venture Capital practice, was featured in the recent <em>Boston Business Journal</em> article, &ldquo;A $50M valuation doesn&rsquo;t guarantee a payday, Startup Week panel warns,&rdquo; which examined why a startup&rsquo;s on-paper valuation often does not translate into what a founder actually receives at exit.</span>Mon, 21 Sep 2026 00:00:00 -0500<p>Gary Schall, co-head of Arnold &amp; Porter&rsquo;s Emerging Companies &amp; Venture Capital practice, was featured in the recent <em>Boston Business Journal</em> article, &ldquo;A $50M valuation doesn&rsquo;t guarantee a payday, Startup Week panel warns,&rdquo; which examined why a startup&rsquo;s on-paper valuation often does not translate into what a founder actually receives at exit.</p> <p>The article covered the Startup Week Boston 2026 session titled &ldquo;Your Startup Is Valued at Millions. So Why Aren&rsquo;t You Rich?&rdquo; during which Gary explained that investors who agree to a higher valuation typically negotiate additional protections in return, such as anti-dilution provisions and other contractual rights governing who gets paid first when a company is sold. He noted that those terms, more than the valuation itself, often determine what a founder ultimately receives when the company exits.</p> <p>Gary also urged founders to vet prospective investors as closely as investors vet them, noting that a venture relationship can last years and that an investor&rsquo;s approach matters as much as the capital provided.</p> <p> <a href="https://www.bizjournals.com/boston/news/2026/09/17/startup-funding-mistakes-founders-make.html">Read the full article</a> (subscription required).</p>{79B3E387-6A91-4E02-ACF9-F620DEC1BA97}https://www.arnoldporter.com/en/perspectives/advisories/2026/09/federal-financial-agencies-shift-third-party-risk-management-toward-a-tailored-risk-based-approachRichard M. Alexanderhttps://www.arnoldporter.com/en/people/a/alexander-richard-mrichard.alexander@arnoldporter.comRobert C. Azarowhttps://www.arnoldporter.com/en/people/a/azarow-robert-crobert.azarow@arnoldporter.comBrendan M. Clegghttps://www.arnoldporter.com/en/people/c/clegg-brendan-mbrendan.clegg@arnoldporter.comChristopher DeCrescehttps://www.arnoldporter.com/en/people/d/decresce-christopherChris.DeCresce@arnoldporter.comDavid F. Freeman, Jr.https://www.arnoldporter.com/en/people/f/freeman-david-fDavid.Freeman@arnoldporter.comAmber A. Hayhttps://www.arnoldporter.com/en/people/h/hay-amber-aamber.hay@arnoldporter.comAnthony Raglanihttps://www.arnoldporter.com/en/people/r/raglani-anthonyanthony.raglani@arnoldporter.comKevin M. Toomeyhttps://www.arnoldporter.com/en/people/t/toomey-kevin-mkevin.toomey@arnoldporter.comChristopher L. Allenhttps://www.arnoldporter.com/en/people/a/allen-christopher-lChristopher.Allen@arnoldporter.comErik Walshhttps://www.arnoldporter.com/en/people/w/walsh-erikerik.walsh@arnoldporter.comOn September 11, 2026, the FDIC, Federal Reserve, OCC, and NCUA (together, the &ldquo;Agencies&rdquo;) issued proposed third-party risk management guidance&nbsp; (the &ldquo;TPRM Guidance&rdquo;) outlining a principles-based approach designed to assist banks and credit unions (together, &ldquo;institutions&rdquo;) in tailoring their third-party risk management practices to the risks of individual relationships.Mon, 21 Sep 2026 00:00:00 -0500<p>On September 11, 2026, the FDIC, Federal Reserve, OCC, and NCUA (together, the &ldquo;Agencies&rdquo;) issued <a rel="noopener noreferrer" href="https://www.occ.gov/news-issuances/federal-register/2026/91fr58536.pdf" target="_blank">proposed third-party risk management guidance</a>[[N: FDIC, Federal Reserve, OCC &amp; NCUA, <em>Proposed Third-Party Risk Management Guidance</em>, 91 Fed. Reg. 58,536 (Sept. 15, 2026).]] (the &ldquo;TPRM Guidance&rdquo;) outlining a principles-based approach designed to assist banks and credit unions (together, &ldquo;institutions&rdquo;) in tailoring their third-party risk management practices to the risks of individual relationships. The TPRM Guidance reflects the Agencies&rsquo; supervisory experiences and lessons learned through examinations of institutions&rsquo; practices in this area. Once finalized, the TPRM Guidance will replace <a rel="noopener noreferrer" href="https://www.govinfo.gov/content/pkg/FR-2023-06-09/pdf/2023-12340.pdf" target="_blank">existing guidance</a>[[N: FDIC, Federal Reserve &amp; OCC, <em>Interagency Guidance on Third-Party Relationships: Risk Management</em>, 88 Fed. Reg. 37,920 (June 9, 2023).]] published by the three federal banking agencies (the &ldquo;FBAs&rdquo;) in 2023. The Agencies acknowledged that institutions have frequently misinterpreted the 2023 guidance as establishing prescriptive requirements, and that they have struggled to tailor the listed examples to their own situations and circumstances.</p> <p>The Agencies believe the new guidance will assist institutions in prioritizing third-party risk management based on material financial risks and resource allocation, promote consistency across the industry, and engender innovation, each of which have been key objectives of the Agencies&rsquo; current leadership. Consistent with the preferred approach articulated in rulemakings, guidance, and internal procedures published by the Agencies during this Administration, the TPRM Guidance is intended to shift institutions&rsquo; focus away from check-the-box exercises in the area of third-party risk management. </p> <p>The TPRM Guidance continues to reiterate the Agencies&rsquo; longstanding position that institutions have the ultimate responsibility to establish and maintain sound risk management practices and to comply with applicable laws and regulations. Institutions&rsquo; use of third parties &mdash; whether they are affiliates, other &ldquo;highly-regulated entities,&rdquo; or subcontractors &mdash; to meet these requirements does not override this responsibility. As with other issuances that fall under the umbrella of guidance, non-compliance with the TPRM Guidance will not result in supervisory action against a covered institution. However, institutions should understand that third-party risk management failures can lead to violations of law or regulation or to unsafe or unsound practices that warrant further action from their regulators.</p> <p>Also on September 11, the FDIC, Federal Reserve, and OCC issued a Joint Statement on <a rel="noopener noreferrer" href="https://www.fdic.gov/joint-statement-community-banks-engagement-core-service-providers.pdf" target="_blank">Community Banks&rsquo; Engagement with Core Service Providers</a>[[N: FDIC, Federal Reserve &amp; OCC, <em>Joint Statement on Community Banks' Engagement with Core Service Providers</em> (Sept. 11, 2026).]] (the &ldquo;Joint Statement&rdquo;) to clarify how the FBAs will address as part of their supervision programs the dynamics of the often-imbalanced relationship between community banks and their core providers. Finally, the Federal Reserve separately issued on September 11 a proposed Third-Party Risk Management Guide for Traditional Community Banking (the &ldquo;<a rel="noopener noreferrer" href="https://www.govinfo.gov/content/pkg/FR-2026-09-15/pdf/2026-18852.pdf" target="_blank">Fed TPRM Guide</a>&rdquo;),[[N: Federal Reserve, <em>Proposed Third-Party Risk Management Guide for Traditional Community Banking Organizations</em>, 91 Fed. Reg. 58,438 (Sept. 15, 2026).]] intended to serve as a companion document to the TPRM Guidance and to provide practical examples for small, non-complex state member banks.</p> <h2>The TPRM Guidance</h2> <p>The TPRM Guidance emphasizes the concepts of risk identification and risk assessment as the foundation of a risk-based approach to third-party risk management. Institutions should tailor the level and detail of oversight to correspond to assessed risk levels to best position themselves to effectively manage third-party risk. The TPRM Guidance confirms the Agencies&rsquo; view that there is no one-size-fits-all approach to effective third-party risk management &mdash; a position they have regularly repeated in recent issuances &mdash; and observes that some third-party relationships will not present the same level of risk across different institutions.&nbsp;&nbsp;</p> <p>Leaning into an embrace of deference to management, the TPRM Guidance is replete with affirmations that the Agencies will give &ldquo;due consideration&rdquo; to institutions&rsquo; &ldquo;reasonable decisions&rdquo; in matters of third-party risk management supervision. To drive this home, the Agencies note that institutions that deviate from the TPRM Guidance or the examples provided therein will not face supervisory action. Examiners will not be permitted to prompt such actions if institutions fail to follow industry best practices, either.&nbsp;</p> <p>The TPRM Guidance lays out four components of managing third-party risk: (i) identifying and assessing applicable risks; (ii) overseeing risks proportionate to their significance; (iii) making informed decisions about residual risks and risk acceptance; and (iv) establishing appropriate governance practices. Within the first component, the TPRM Guidance covers the process of identifying, categorizing, and inventorying third-party relationships.</p> <p>Within the second component, the Agencies reinforce the importance of institutions&rsquo; tailoring third-party oversight to the institution&rsquo;s size, complexity, and risk profile, as well as the nature and type of each third-party relationship. The TPRM Guidance outlines relevant considerations for each stage of the third-party relationship life cycle, including due diligence, contract negotiation, ongoing monitoring, and termination. Institutions are reminded that they can benefit from considering third-party risk management holistically rather than utilizing a siloed, &ldquo;stage-by-stage&rdquo; analysis. The TPRM Guidance explains the Agencies&rsquo; views related to third-parties&rsquo; reliance on subcontractors, and the emerging trend of institutions leveraging arrangements like consortiums to collaborate on discrete aspects of third-party risk management, such as the creation of standard contracts.</p> <p>In discussing the third component, the Agencies affirm that institutions are not expected to &ldquo;eliminate&rdquo; third-party risk, and acknowledge that the materiality of some risks will not justify the amount of oversight required to mitigate those risks. For some third-party relationships, institutions cannot practically mitigate the risks if, for example, they lack bargaining power to negotiate contract terms. Finally, within the fourth component, the Agencies stress that there is no single &ldquo;right way&rdquo; for institutions to structure their governance practices; decisions in this area will be driven by each institution&rsquo;s size, complexity, risk profile, and third-party relationships. &ldquo;Due consideration&rdquo; will be given to an institution&rsquo;s &ldquo;reasonable&rdquo; governance considerations when the Agencies review the practices employed.</p> <h2>The Joint Statement</h2> <p>Coinciding with the publication of the TPRM Guidance, the FBAs issued the Joint Statement to confront the reality that the business practices of core service providers &mdash; the &ldquo;most material, complex, and highest-risk third-party relationships&rdquo; for community banks &mdash; pose obstacles to these banks&rsquo; ability to effectively identify, assess, and address the risks posed. Because a &ldquo;significant percentage&rdquo; of the core provider market is comprised of only a few large companies, community banks&rsquo; negotiating powers are severely curtailed. Relying on stakeholders&rsquo; input and collecting intel gained through its supervisory activities, the FBAs concluded that the market dynamics and corresponding impact to community banks&rsquo; ability to address risks require additional considerations for conducting risk-based supervision of core providers going forward. These will include: (i) the level of a core provider&rsquo;s transparency with community banks; (ii) the use by core providers of contract terms that make it difficult for banks to manage these relationships; and (iii) the extent of core providers&rsquo; technology investments and capabilities.</p> <p>After outlining these considerations, the Agencies pivot to outlining how they can bring supervisory and enforcement actions against core providers. They conclude that because of the &ldquo;operational reality&rdquo; of the relationship between community banks and core providers, the latter &ldquo;participate[] in the conduct of the affairs&rdquo; of the banks, as the services provided are integral to the banks&rsquo; functioning and to their ability to provide products and services. Therefore, core providers can be deemed &ldquo;institution affiliated parties,&rdquo; or IAPs, exposing them to potential enforcement liability if their community bank customers engage in unsafe or unsound practices or violate the law.</p> <h2>The Fed TPRM Guide</h2> <p>In issuing the Fed TPRM Guide, the Federal Reserve sought to provide further assistance to certain community banks and to articulate how the principles of the TPRM Guidance can be applied in practice and operationalized. The Federal Reserve relied on information from its own supervisory experience, as well as observations of sound risk management practices at banks in its portfolio, which included reviews of risk assessment methodologies, sample contracts, and due diligence files.&nbsp;&nbsp;</p> <p>The Fed TPRM Guide is intended to apply to &ldquo;traditional&rdquo; state member banks with less than $30 billion in assets that are focused on serving their local communities; it is not intended for those smaller banks with more complex business models or third-party relationship profiles, such as complex bank-fintech partnerships. As with the TPRM Guidance, the Fed TPRM Guide does not set forth enforceable standards. Non-compliance with the Fed TPRM Guide will not result in supervisory criticism against any state member bank.&nbsp;&nbsp;</p> <p>The Fed TPRM Guide covers four overarching third-party risk management topics common to traditional community bank third-party relationships: operational resilience; system and information security; compliance with laws and regulations; and financial resilience. The Fed TPRM Guide also provides specific considerations for common third-party relationships for community banks, including providers of, core services, IT infrastructure, cybersecurity, payment processing and digital banking, loan management systems, card issuing and processing, BSA/AML and financial crime platforms, and fraud prevention and detection.</p> <h2>Takeaways</h2> <ul> <li>With these three complementary publications, the Agencies have demonstrated their willingness to continue to refine even recently-issued guidance to eliminate remaining prescriptive requirements, and to emphasize the supervisory principles most important to Agency leadership, such as tailoring. Consistent with the focus on tailoring, the Agencies stress that third-party relationships some institutions assess as higher risk may not fit that label at other institutions.</li> <li>Among other rationales for rescinding the recently issued 2023 guidance was industry feedback that broad language used in that earlier document may have impeded development of fintech-bank partnerships. This signals the Agencies&rsquo; renewed embrace of these relationships, and likely portends a return to a lighter-touch regime, turning away from the stringent enforcement regime employed during the early Biden years.</li> <li>The TPRM Guidance is another concrete example of the Agency leadership&rsquo;s refrain that risk management is not about <a rel="noopener noreferrer" href="https://www.occ.gov/news-issuances/news-releases/2026/nr-occ-2026-46.html" target="_blank">risk elimination</a>.[[N: <em>See, e.g.</em>, Jonathan V. Gould, Comptroller of the Currency, Comptroller Gould Testifies on Agency Activities, OCC News Release 2026-46 (June 4, 2026).]] This mindset carries over to third-party risk management, as reflected in the Agencies&rsquo; statement that it is unlikely institutions can identify all possible risks, and they are not expected to do so. The Agencies acknowledge the &ldquo;rapidly evolving marketplace&rdquo; for third-party services and recognize that some relationships may still be beneficial and even necessary for institutions to operate competitively, even if the institutions cannot significantly mitigate the risks posed by those relationships.</li> <li>As the Agencies have underscored in other recent rules, examiners are to give more deference to management&rsquo;s judgment. In the TPRM Guidance, examiners are directed to &ldquo;give due consideration&rdquo; to management, including regarding assessments of risk for individual third-party relationships.&nbsp;&nbsp;</li> <li>Despite the more industry-friendly positioning, however, institutions must still be mindful of a number of well-worn guardrails. The Agencies continue to stress the importance of continued monitoring and recalibration of third-party risk assessments when warranted. Adjustments may be prompted by due diligence, contract negotiations, or changing circumstances &mdash; including an institution&rsquo;s own experience with a given third-party.</li> <li>By issuing the Joint Statement, the FBAs clearly indicated they have heard community banks&rsquo; complaints regarding their relationships with their core providers. The relative imbalance has constricted community banks&rsquo; ability to modify contractual terms and to terminate existing agreements without significant financial penalties. The FBAs have put the core providers on notice that they are willing to flex their enforcement muscles if those relationships lead to banks engaging in unsafe or unsound practices or violations of law, to the same extent as if those core providers are parts of the banks themselves. Even a single use of this authority by the FBAs could meaningfully impact the dynamics of this market.</li> </ul> <p>Please contact the authors of this Advisory or your regular Arnold &amp; Porter contact if you have questions or would like to discuss how these issuances may impact your institution.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{60B6A193-2674-47B3-B3CA-341CDD11F540}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/09/stacey-halliday-weighs-in-on-oregon-epr-ruling-for-corporate-counselStacey Halliday, a partner in Arnold &amp; Porter&rsquo;s Environmental practice, was quoted in the recent <em>Corporate Counsel </em>article, &ldquo;Oregon Ruling Gives a Boost to State Recycling Laws,&rdquo; which examined a federal court ruling upholding Oregon&rsquo;s extended producer responsibility law against a commerce clause and due process challenge.Fri, 18 Sep 2026 00:00:00 -0500<p>Stacey Halliday, a partner in Arnold &amp; Porter's Environmental practice, was quoted in the recent <em>Corporate Counsel </em>article, "Oregon Ruling Gives a Boost to State Recycling Laws," which examined a federal court ruling upholding Oregon's extended producer responsibility law against a commerce clause and due process challenge.</p> <p>Stacey said that even though other states' laws differ in some specifics, the interstate commerce and due process arguments raised in the Oregon case are likely to resurface. She added that, for now, companies in Oregon should embrace what she called "full speed ahead compliance," staying on top of the law's reporting and fee deadlines while the ruling is likely to be appealed.</p> <p><a href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.law.com%2Fcorpcounsel%2F2026%2F09%2F10%2Foregon-ruling-gives-a-boost-to-state-recycling-laws%2F&amp;data=05%7C02%7CMeghan.Green%40arnoldporter.com%7C2ff201aa25574359154e08df1586ce12%7Cd22d141fae37447facfa2e1d0e5b4969%7C0%7C0%7C639253340908297873%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&amp;sdata=T3Q9Oyk%2FsNXxQiGmw4vm9u1IK90c3z1rAPrcl21It04%3D&amp;reserved=0">Read the full article</a> (subscription required).</p>{96C7EE54-99E8-499E-AF1F-9599F2B48084}https://www.arnoldporter.com/en/perspectives/news/2026/09/arnold-porter-advises-bcb-bancorp-in-98m-registered-public-offering-of-common-stockArnold &amp; Porter recently served as issuer's counsel to BCB Bancorp, Inc., parent company of BCB Community Bank, in connection with an underwritten public offering of 12.65 million shares of its common stock, including the full exercise of the underwriter's option to purchase up to 1.65 million additional shares.Fri, 18 Sep 2026 00:00:00 -0500<p>Arnold &amp; Porter recently served as issuer's counsel to BCB Bancorp, Inc., parent company of BCB Community Bank, in connection with an underwritten public offering of 12.65 million shares of its common stock, including the full exercise of the underwriter's option to purchase up to 1.65 million additional shares.</p> <p>The offering, which closed on September 18, 2026, resulted in total gross proceeds of $98,037,500.</p> <p>The Arnold &amp; Porter corporate team was led by partners Rob Azarow and Chris DeCresce and included senior associates Greg Criscitello and Valentina Garzon, and associates Noel Abdala-Arata, Remila Jasharllari, and Jacob Saracino. The team also included partner Reuven Graber and associate Sean Kavanaugh on certain tax matters. Partner Kathleen Reilly, senior counsel Christopher Allen, senior associate William Omorogieva, and associate Allie Archer advised on select due diligence matters.</p>{D5B8CEF8-380C-40E2-B4E4-4F28E8FAE68E}https://www.arnoldporter.com/en/perspectives/advisories/2026/09/sdny-upholds-new-yorks-social-media-content-moderation-disclosure-lawTheresa M. Househttps://www.arnoldporter.com/en/people/h/house-theresa-mtheresa.house@arnoldporter.comPilar A. Martinezhttps://www.arnoldporter.com/en/people/m/martinez-pilarpilar.martinez@arnoldporter.comIn a blow to tech industry efforts to challenge state social media regulations, X Corp. (formerly Twitter) lost its challenge to a New York state law requiring social media platforms to disclose content moderation policies.Fri, 18 Sep 2026 00:00:00 -0500<p>In a blow to tech industry efforts to challenge state social media regulations, X Corp. (formerly Twitter) lost its challenge to a New York state law requiring social media platforms to disclose content moderation policies. On August 26, 2026, Judge John P. Cronan of the U.S. District Court for the Southern District of New York rejected X&rsquo;s claims that the law was barred by the First Amendment, holding that the law&rsquo;s reporting requirements are &ldquo;purely factual and uncontroversial&rdquo; and thus subject to a deferential standard of review under <em>Zauderer v. Office of Disciplinary Counsel</em>, 471 U.S. 626 (1985), in which the court found the law survived. In doing so, the decision sets up a potential circuit split with the Ninth Circuit, which reached the opposite conclusion on a nearly identical statute adopted in California in <em>X Corp. v. Bonta</em>, 116 F.4th 888 (9th Cir. 2024). This increases the likelihood that the U.S. Supreme Court will eventually be asked to resolve whether <em>Zauderer</em> applies to content moderation policy disclosure laws, including whether such disclosures are &ldquo;controversial&rdquo; under the law. </p> <h2>Background</h2> <p>In 2024, the New York legislature enacted Article 42 of the General Business Law, which requires social media companies to post their terms of service (TOS) publicly and to file a semi-annual &ldquo;Terms of Service Report&rdquo; with the New York Attorney General. In the TOS report, social media companies must disclose whether their TOS define certain categories of content, and if so, the definitions of those categories. Among the specified categories are several that X Corp. would later argue were impermissibly based on the content of the company&rsquo;s speech, including terms addressed to moderating hate speech or racism, extremism or radicalization, disinformation or misinformation, harassment, and/or foreign political interference (the &ldquo;Content Category Report&rdquo; provisions). The law also requires social media companies to detail their content moderation practices addressing those categories and report enforcement statistics of those categories, disaggregated by content type and moderation method. Violators face civil penalties up to $15,000 per violation per day with a 30-day cure period. </p> <p>X Corp. sued New York&rsquo;s Attorney General Leticia James, arguing that the Content Category Report provisions were content-based restrictions that are subject to strict or intermediate scrutiny under the First Amendment. X Corp. also argued that the law was preempted by Section 230. New York moved to dismiss the claims, arguing that the law&rsquo;s provisions are commercial speech requiring only factual, uncontroversial disclosures, thus the more permissive <em>Zauderer</em> standard applies.</p> <h2>The S.D.N.Y. Opinion </h2> <p>The S.D.N.Y. opinion accordingly had to address what standard applied to the moderation law, as well as whether it could withstand that scrutiny. Under the First Amendment, laws regulating the content of speech are generally subject to heightened scrutiny. In <em>Zauderer</em>, however, the Supreme Court held that laws requiring commercial speakers to disclose &ldquo;purely factual&rdquo; and &ldquo;uncontroversial&rdquo; information about their goods and services are subject to a more relaxed standard. Under this standard, the disclosure requirements are permitted when the disclosure is (1) reasonably related to a legitimate government interest and (2) not unduly burdensome. </p> <h3>The Disclosures are Commercial Speech</h3> <p>The court first held as a threshold issue that the disclosures are commercial speech because the disclosure of content moderation policies relate to &ldquo;the terms of the commercial transaction between the platforms and users.&rdquo; The court contrasted this with a law requiring the disclosure of opinions about content moderation policies or reasons that content moderation policies were adopted, which would not qualify as commercial speech. In making this distinction, the court considered the &ldquo;Act&rsquo;s plain text,&rdquo; which it found simply asked for disclosure of whether &ldquo;the current version of the terms of service defines&rdquo; content categories like hate speech, and if so, what those definitions are. Put simply: the &ldquo;provision just requires disclosing existing policies, not the reasons for or opinions about those policies.&rdquo;&nbsp;</p> <h3>The Disclosures Pertain Only to Purely Factual and Uncontroversial Information</h3> <p>X Corp. argued that its content moderation policies could not be &ldquo;purely factual&rdquo; under <em>Zauderer</em> because those policies reflect the company&rsquo;s exercise of discretion. In rejecting this argument, the court drew from the reasoning in <em>New York Restaurant Association v. New York City Board of Health</em>, 556 F.3d 114 (2d Cir. 2009), a case involving required disclosure of calorie counts on restaurant menus, which held that a restaurant&rsquo;s discretion on what to sell does not make disclosure of calorie contents any less factual. Thus, even if X Corp. exercises discretion when choosing to define categories like hate speech, X Corp.&rsquo;s confirmation that it has defined those categories and disclosure of what the contents of its definitions are is still &ldquo;factual&rdquo; in nature.</p> <p>Significantly, the court also held that while the existence of X Corp.&rsquo;s content moderation policies may generate controversy, &ldquo;the fact that they are what they are is not&rdquo; controversial, for the purposes of <em>Zauderer</em>. According to the court, the disclosure law&rsquo;s purpose is not, as X Corp. frames it, to generate public controversy, but rather to give consumers information about social media platforms&rsquo; policies so that they may choose platforms that align with their values. The court wrote that adopting X Corp.&rsquo;s framing would turn &ldquo;the <em>Zauderer </em>framework on its head&rdquo; &mdash; as any compelled disclosure has the potential to generate controversy. The controversy that X Corp. is concerned with, the court concluded, &ldquo;is a feature of Zauderer and the First Amendment, not a bug.&rdquo;</p> <h3>Disclosure Is Reasonably Related to New York&rsquo;s Interest in Preventing Deception of Consumers and Not Unduly Burdensome</h3> <p>The court also found that <em>Zauderer</em> scrutiny was satisfied, concluding that New York&rsquo;s legislature had &ldquo;rationally determined&rdquo; that current content moderation policies are hard to find and hinder consumers&rsquo; comparison of different platform policies. Furthermore, the <em>Zauderer</em> framework allows states to &ldquo;mandate disclosures in the hopes that better informed consumers will make different decisions,&rdquo; as &ldquo;long as those decisions are left up to the marketplace&rdquo; of ideas. The court also wrote that X Corp.&rsquo;s argument that the law is unduly burdensome because it chills the protected speech of social media platform users fails, as the argument was entirely speculative.&nbsp;</p> <h3>Section 230 Does Not Preempt the Content Category Report Provisions</h3> <p>Lastly, the court rejected X Corp.&rsquo;s claims that Section 230 immunizes social media companies because it found that the &ldquo;Content Category Report Provisions are consistent with Section 230, and are thus not preempted by that provision.&rdquo;</p> <h2>Insights</h2> <p>The decision gives platforms operating in New York a concrete answer to disclosure obligations under the law. However, because the complaint was dismissed without leave to amend, an appeal to the Second Circuit is likely, so companies should not treat this decision as the final word. The decision also signals a potential split with the Ninth Circuit. In 2024, the Ninth Circuit, in <em>X Corp. v. Bonta</em>, struck down a nearly identical law after applying strict scrutiny. In doing so, the Ninth Circuit held that the &ldquo;Content Category Report Provisions likely compel non-commercial speech&rdquo; because the speech at issue does not concern the usual definitions of commercial speech and requires companies to &ldquo;express a view about those terms by conveying whether a company believes certain categories should be defined and proscribed.&rdquo; As non-commercial speech, the Ninth Circuit declined to apply<em> Zauderer</em>. Practically, platforms operating nationally should expect to have varying compliance obligations depending on the circuit until this split is resolved.</p> <p>While X Corp. was at the center of discussion, the reporting requirements apply beyond large, name-brand social media companies like X, Meta, and TikTok. Any company operating a &ldquo;public or semipublic internet-based service or application&rdquo; with New York users that functions to &ldquo;allow users to interact socially with each other within the service or application&rdquo; and &ldquo;construct a profile to use the service&rdquo; to &ldquo;create or post content viewable or audible by other users&rdquo; is subject to the reporting requirements.&nbsp;</p> <p>Aside from the implications for social media companies, the court&rsquo;s treatment of <em>Zauderer</em>&rsquo;s &ldquo;uncontroversial&rdquo; prong is worth noting. In recent years, the &ldquo;uncontroversial&rdquo; prong of <em>Zauderer</em> has been used to strike down laws requiring notices about emergency contraceptives and abortion referrals at pregnancy service centers and to uphold laws requiring restaurants to disclose calorie counts. However, there is little consensus on whether &ldquo;controversial&rdquo; refers to the disclosure&rsquo;s subject matter, its reception by consumers, or the specific statement compelled. This opinion offers a clearer formulation: a policy can be controversial while the fact of its existence is not. This reasoning may be especially useful in areas such as consumer product warnings, nutritional and health-related disclosures, and climate-related disclosures where lawmakers and industry members continue to debate the lines between uncontroversial, factual disclosure and impermissible compelled speech.&nbsp;</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{1979281F-E23A-4F00-AA3F-98C884601C0C}https://www.arnoldporter.com/en/perspectives/events/2026/09/data-protection-update-what-inhouse-counsel-hr-and-compliance-professionals-need-to-knowJames Castro-Edwardshttps://www.arnoldporter.com/en/people/c/castro-edwards-jamesjames.castro-edwards@arnoldporter.comHenry Clinton-Davishttps://www.arnoldporter.com/en/people/c/clintondavis-henryhenry.clinton-davis@arnoldporter.comWe are pleased to invite you to an update webinar on data protection when dealing with employees, covering a raft of recent changes, including The Data (Use and Access) Act 2025.Thu, 17 Sep 2026 00:00:00 -0500<p>We are pleased to invite you to an update webinar on data protection when dealing with employees, covering a raft of recent changes, including The Data (Use and Access) Act 2025 - the most significant reform to UK data protection law since the introduction of the UK GDPR.</p> <p>For UK businesses and for U.S. companies with UK employees or operations, these changes affect everyday HR and compliance practices, from how consent and legitimate interests operate in the employment relationship to subject access requests, privacy notices, and international data transfers.</p> <p>Join Arnold &amp; Porter&rsquo;s James Castro-Edwards (Counsel, Privacy, Cybersecurity &amp; Data Strategy) and Henry Clinton-Davis (Partner, Head of UK Employment) for a practical 60-minute briefing, including live Q&amp;A.</p> <h2>We will cover:</h2> <ul> <li>Legal framework: the GDPR, UK GDPR, Data Protection Act 2018, and the Data (Use and Access) Act 2025 &ndash; how does it all fit together?</li> <li>Territorial scope &ndash; you don&rsquo;t have to have a UK branch or subsidiary to be caught.</li> <li>Key concepts (personal data, controllers, processors, processing)</li> <li>Lawful bases for processing (and the problem with employees&rsquo; consent)</li> <li>Transparency: employee privacy notices</li> <li>Automated decision-making &ndash; more flexibility for HR</li> <li>Data subjects&rsquo; rights &ndash; including more flexible approaches for dealing with employee data subject access requests</li> <li>Data transfers &ndash; what&rsquo;s changed and how do I ensure transfers of data to the US are compliant?</li> <li>Using UK employee data in U.S. legal proceedings</li> <li>Personal data breaches, including when ex-employees steal customer information</li> </ul>{ADF08862-3902-420F-A4C7-2BA1902F0C72}https://www.arnoldporter.com/en/perspectives/news/2026/09/forbes-names-four-arnold-porter-partners-to-2026-americas-top-lawyers-list<p>Four Arnold &amp; Porter partners were recently named to <em>Forbes</em>' 2026 America's Top Lawyers list. View the full list and methodology on <em><a href="https://www.forbes.com/lists/top-lawyers/">Forbes.com</a></em>.</p>Thu, 17 Sep 2026 00:00:00 -0500<p>Four Arnold &amp; Porter partners were recently named to <em>Forbes</em>' 2026 America's Top Lawyers list. View the full list and methodology on <em><a href="https://www.forbes.com/lists/top-lawyers/">Forbes.com</a></em>.</p> <p>The following partners were named to the list:</p> <ul> <li>Sheila S. Boston &mdash; Litigation</li> <li>Deborah Curtis &mdash; White Collar Defense</li> <li>Debbie Feinstein &mdash; Antitrust Law</li> <li>Pallavi Mehta Wahi &mdash; Litigation</li> </ul>{27DB0155-3E44-4A9F-A370-203310AA4C6A}https://www.arnoldporter.com/en/perspectives/publications/2026/09/root-causes-updates-and-insights-on-quality-and-inspectionsHoward Sklamberghttps://www.arnoldporter.com/en/people/s/sklamberg-howardhoward.sklamberg@arnoldporter.comElizabeth Trentacosthttps://www.arnoldporter.com/en/people/t/trentacost-elizabethelizabeth.trentacost@arnoldporter.comClaire W. Dennishttps://www.arnoldporter.com/en/people/d/dennis-claireclaire.dennis@arnoldporter.comLily Caohttps://www.arnoldporter.com/en/people/c/cao-lilylily.cao@arnoldporter.comDorothy Chenhttps://www.arnoldporter.com/en/people/c/chen-dorothydorothy.chen@arnoldporter.comManufacturing and chemistry, manufacturing, and controls (CMC) issues remain at the center of the U.S. Food and Drug Administration&rsquo;s (FDA) regulatory agenda this year.&nbsp;This newsletter rounds up both recent and notable developments in the past few months that are worth a read for sponsors, manufacturers, and life sciences industry stakeholders.Thu, 17 Sep 2026 00:00:00 -0500<p>We are happy to launch a new newsletter, Root Causes: Updates and Insights on Quality and Inspections. The newsletter, which will come out roughly monthly, will discuss new developments in FDA inspections and enforcement, and its regulation of manufacturing and clinical trials. We will also discuss occasional developments from overseas regulators, such as in Europe, that affect the U.S. market.</p> <p>Manufacturing and chemistry, manufacturing, and controls (CMC) issues remain at the center of the U.S. Food and Drug Administration&rsquo;s (FDA) regulatory agenda this year. In recent months, FDA has pursued changes on multiple fronts &mdash; a proposed rule to address advanced manufacturing arrangements, new CMC commitments and inspection-related engagement through the user fee negotiations, among other developments. These developments reflect FDA&rsquo;s focus on obtaining greater insights into the drug manufacturing supply chain, as well as streamlining and updating certain operations. This newsletter rounds up both recent and notable developments in the past few months that are worth a read for sponsors, manufacturers, and life sciences industry stakeholders.</p> <ul> <li><a href="#CMC and Inspection-Related Enhancements Proposed for the Prescription Drug User Fee Act (PDUFA) VIII Commitment Letter">CMC and Inspection-Related Enhancements Proposed for the Prescription Drug User Fee Act (PDUFA) VIII Commitment Letter</a></li> <li><a href="#FDA Issued a Proposed Rule Regarding Registration and Listing for Distributed Manufacturing Establishments and Certain Foreign Entities">FDA Issued a Proposed Rule Regarding Registration and Listing for Distributed Manufacturing Establishments and Certain Foreign Entities</a></li> <li><a href="#FDA Advances Two Manufacturing-Related Proposed Rules">FDA Advances Two Manufacturing-Related Proposed Rules</a></li> <li><a href="#FDA’s Upcoming Agency Reorganization — “Simple Reform” Unveiled">FDA&rsquo;s Upcoming Agency Reorganization &mdash; &ldquo;Simple Reform&rdquo; Unveiled</a></li> <li><a href="#FDA Emphasizes the Importance of Good Clinical Practices, and Reaffirms its Commitment to Human Subject Protections and “Gold Standard Science” in the Global Clinical Trial Landscape">FDA Emphasizes the Importance of Good Clinical Practices, and Reaffirms its Commitment to Human Subject Protections and &ldquo;Gold Standard Science&rdquo; in the Global Clinical Trial Landscape</a></li> </ul> <h2><a name="CMC and Inspection-Related Enhancements Proposed for the Prescription Drug User Fee Act (PDUFA) VIII Commitment Letter">CMC and Inspection-Related Enhancements Proposed for the Prescription Drug User Fee Act (PDUFA) VIII Commitment Letter</a></h2> <p>The next chapter of the PDUFA program is taking shape &mdash; FDA kicked off the public meeting for PDUFA VIII on September 16, 2026. One month prior, on August 14, 2026, FDA released the proposed PDUFA VIII Commitment Letter for public review and comment. This letter outlines the proposed user fee commitments that would govern the program for fiscal years 2028 through 2032. PDUFA VIII builds on the CMC enhancements and lessons learned under PDUFA VII, continuing FDA&rsquo;s efforts to strengthen communication with sponsors throughout product development and application review. As part of this effort, FDA has proposed a risk-based lifecycle approach to identifying and resolving manufacturing facility deficiencies, intended to support the timely development and availability of new and innovative products.</p> <p>CMC facility issues are critical to advancing a product through FDA review and success in commercialization. Manufacturing facility deficiencies can result in Complete Response Letters (CRLs) and additional review cycles. To help prevent or mitigate these issues, or foster early resolution, the proposed Commitment Letter offers a &ldquo;CMC facility lifecycle program.&rdquo; This program is grounded in new and enhanced engagement mechanisms between FDA and industry that may occur before, during, and after an application review cycle. The opportunity for sponsors and FDA to communicate about these issues in a formalized setting, represents a meaningful development in advancing resolution of outstanding facility issues and bringing products to market.</p> <p>As part of this initiative, FDA aims to publish draft guidance by October 1, 2028 covering facility readiness ahead of pre-approval inspection (PAI) or pre-license inspection (PLI); best practices and timelines for meetings held before submission, after inspection, and after an approval action; as well as methods sponsors can use to self-assess facility readiness.&nbsp;</p> <p>The Commitment Letter also introduces several new meeting types with defined windows and procedures. For example, the CMC facility pre-submission meetings for New Drug Applications (NDAs) and Biologics License Applications (BLAs) may occur three to six months before an original NDA/BLA or supplement is filed. During this meeting, applicants can discuss the manufacturing supply chain, facility interdependencies, risk mitigation, and prior inspection history to help inform FDA&rsquo;s risk-based facility evaluation approach. Similarly, post-PAI or post-PLI meetings are also available to original NDAs or BLAs applicants. This type of meeting would allow original applicants to discuss inspection findings and proposed corrective actions after FDA flags Form 483 observations that could lead to a CRL. If a CRL is ultimately issued following inspection deficiencies, applicants may utilize a Type A post-action meeting to address what must be resolved before approval. In addition, FDA commits to notifying applicants at least 60 days before &mdash; and no later than mid-review-cycle for &mdash; any planned facility inspection tied to an original application. To evaluate the program&rsquo;s effectiveness, FDA intends to engage an independent third party to hold a public workshop by September 30, 2030 examining implementation and its impact on facility readiness and CRLs.</p> <p>For a more detailed review of the PDUFA VIII Commitment Letter, please see our <a href="/en/perspectives/advisories/2026/08/fda-releases-proposed-pdufa-viii-commitment-letter">August 2026 Advisory</a>.</p> <h2><a name="FDA Issued a Proposed Rule Regarding Registration and Listing for Distributed Manufacturing Establishments and Certain Foreign Entities">FDA Issued a Proposed Rule Regarding Registration and Listing for Distributed Manufacturing Establishments and Certain Foreign Entities</a></h2> <p>On July 13, 2026, FDA published a <a rel="noopener noreferrer" href="https://www.fda.gov/news-events/press-announcements/fda-proposes-rule-modernize-drug-manufacturing-registration" target="_blank">proposed rule</a> that would amend drug establishment registration and drug listing requirements for establishments engaged in distributed manufacturing (DM) and certain foreign drug establishments. The proposal would create a DM-specific registration pathway for eligible distributed manufacturing establishments (DMEs) operating under a hub-and-spoke model, allowing the hub and geographically dispersed manufacturing units to register as a single establishment rather than requiring each location to register separately. To qualify, DM units generally would need to remain equivalent in design and operation, manufacture the same drugs under the oversight of a single quality unit and unified pharmaceutical quality system, and satisfy other specified criteria. The proposal would also permit units to be added, relocated, or removed through a streamlined update process, while requiring advance notice to FDA of unit relocations.&nbsp;</p> <p>Separately, FDA proposed to align its regulations with amendments to the Federal Food, Drug, and Cosmetic (FD&amp;C) Act made by the PREVENT Pandemics Act by clarifying that foreign establishments manufacturing drugs, including active pharmaceutical ingredients, that are ultimately imported or offered for import into the United States must register and list those drugs even if they undergo further manufacturing at another foreign establishment before entering the United States. FDA stated that the changes are intended to improve supply-chain visibility, provide a clearer picture of where and how drugs are manufactured, and reduce administrative burdens for innovative manufacturers. For a more detailed summary of the proposed rule, please refer to our <a href="/en/perspectives/advisories/2026/07/fda-proposes-new-registration-and-listing-pathway-for-distributed-manufacturing">July 2026 Advisory</a>. The comment period for the proposed rule closed on September 11, 2026.</p> <h2><a name="FDA Advances Two Manufacturing-Related Proposed Rules">FDA Advances Two Manufacturing-Related Proposed Rules</a></h2> <p>FDA is planning additional rulemaking related to manufacturing. One is <a rel="noopener noreferrer" href="https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202510&amp;RIN=0910-AJ31" target="_blank">Amendments to 21 CFR Parts 210 and 211; Current Good Manufacturing Practices; Advanced Manufacturing, Distributed, and Point of Care Manufacturing</a>, which would clarify the application of Current Good Manufacturing Practice (cGMP) regulations to advanced manufacturing technologies, including continuous manufacturing, distributed manufacturing, and point-of-care manufacturing. The proposal would clarify how manufacturers may use a science- and risk-based approach to CGMP compliance, including flexible approaches to defining batches, modern control strategies based on real-time monitoring and material traceability, and lifecycle-based validation and process verification. It would also clarify CGMP expectations for manufacturing drugs produced in small quantities, including drugs for rare diseases. Publication of the rule was targeted for July 2026, although these timeframes often slip; the rule could be forthcoming in the fall or winter.&nbsp;</p> <p>FDA also proposed <a rel="noopener noreferrer" href="https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202510&amp;RIN=0910-AJ32" target="_blank">Amendments to 21 CFR Parts 201, 314, and 601 to Promote Supply Chain Transparency in Human Drug Labeling; Identifying API and FDF Manufacturing Sites</a>, which would require brand and generic pharmaceutical manufacturers to improve transparency of pharmaceutical manufacturing information. The amendments are intended to enhance FDA oversight of the drug supply chain. Similarly, this rulemaking was also targeted for a July 2026 publication timeframe, and could be released in the coming months.&nbsp;</p> <h2><a name="FDA’s Upcoming Agency Reorganization — “Simple Reform” Unveiled">FDA&rsquo;s Upcoming Agency Reorganization &mdash; &ldquo;Simple Reform&rdquo; Unveiled</a></h2> <p>FDA intends to reorganize the agency&rsquo;s structure, effective October 1, 2026. FDA announced this initiative on July 29, 2026, in a <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/07/29/2026-15297/statement-of-organization-functions-and-delegations-of-authority" target="_blank">Statement of Organization, Functions, and Delegations of Authority</a> published in the Federal Register. FDA intends to centralize and enhance key functions across the agency to reduce redundancies, improve efficiency, and advance alignment. This reorganization is the Simple Reform initiative that FDA referenced in its 2027 budget request documents.&nbsp;</p> <p>As part of the reorganization, FDA will expand the scope of FDA&rsquo;s Office of Operations, consolidating a range of agency-wide functions, including information governance, Freedom of Information Act operations, records and eDiscovery, and other administrative services. FDA will also establish new offices, including the Office of Mission Information Technology Services, Office of Health Advancement, and Office of National Health Security.&nbsp;</p> <p>Changes to the Office of Inspections and Investigations (OII) are also expected. For example, the Office of Inspectional Performance Optimization will replace the Office of Field Operations and Response, and will have a different internal structure. Although shifts to OII are forthcoming, this does not mean FDA is pursuing a return to a general inspectorate. FDA confirmed this in an August 2026 <a rel="noopener noreferrer" href="https://www.fda.gov/news-events/fda-voices/investing-fdas-inspectional-enterprise" target="_blank">FDA Voices </a>blog post and noted it is strengthening investigator training and readiness, including through more structured onboarding, standardized training modules, and cross-functional development opportunities to ensure that investigators can operate effectively across different product areas, when needed. FDA also used this post to highlight its &ldquo;intensifying&rdquo; use of unannounced foreign inspection to assess manufacturing quality, and its focus on establishing parity for foreign and domestic inspections. Still, Andrew Byrnes, director of Center for Biologics Evaluation and Research&rsquo;s (CBER) Division of Gene Therapy 1, conveyed at the American Society of Gene and Cell Therapy&rsquo;s 2026 Policy Summit on September 14, 2026, that &ldquo;the goal behind [Simple Reform], as it applies to inspections, is to have a more agile inspection workforce that can be more generalist.&rdquo;&nbsp;</p> <h2><a name="FDA Emphasizes the Importance of Good Clinical Practices, and Reaffirms its Commitment to Human Subject Protections and “Gold Standard Science” in the Global Clinical Trial Landscape">FDA Emphasizes the Importance of Good Clinical Practices, and Reaffirms its Commitment to Human Subject Protections and &ldquo;Gold Standard Science&rdquo; in the Global Clinical Trial Landscape</a></h2> <p>In an FDA Voices <a rel="noopener noreferrer" href="https://www.fda.gov/news-events/fda-voices/good-clinical-practices-are-not-optional-fdas-commitment-human-subject-protections-and-gold-standard" target="_blank">blog post</a> dated September 2, 2026, FDA reaffirmed the importance of Good Clinical Practice (GCP) and its commitment to protecting human subjects and rigorous scientific standards. Consistent with the agency&rsquo;s recent focus on the rise of foreign clinical trials and their attendant risks, FDA addressed issues associated with the globalization of modern clinical research, which has made oversight of foreign clinical trial sites more challenging. For example, some foreign sites have denied the agency access or conditioned inspections on agreements that would improperly restrict the scope or conduct of the inspection or require FDA to enter into agreements it cannot lawfully execute. To address these concerns, FDA intends to expand its Bioresearch Monitoring (BIMO) inspection program, including by increasing coverage of Phase 1 and other early-stage trials, updating the risk-based criteria used to select international sites for inspection, and increasing public transparency when inspection access is denied or restricted so that sponsors and patients can take that information into account in development and regulatory decision-making. FDA also intends to increase scrutiny of clinical studies and sites not conducted under an Investigational New Drug (IND) or Investigational Device Exemption (IDE), particularly in jurisdictions where conditions raise concerns regarding data integrity or the adequacy of informed consent.</p> <p><span style="font-size: small;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{EB817E95-E2D3-4D32-9F96-A3E9765011B9}https://www.arnoldporter.com/en/perspectives/events/2026/09/keeping-pace-with-modern-marketing-practical-legal-risk-mitigation-in-the-age-of-ai-and-influencersRaqiyyah Pippinshttps://www.arnoldporter.com/en/people/p/pippins-raqiyyahraqiyyah.pippins@arnoldporter.comTheresa M. Househttps://www.arnoldporter.com/en/people/h/house-theresa-mtheresa.house@arnoldporter.comJoin our Consumer Products &amp; Retail Navigator webinar series for our next program, focused on how companies can practically mitigate litigation and regulatory risk in an environment shaped by AI-driven features and influencer-led content.Wed, 16 Sep 2026 00:00:00 -0500<p>Join Arnold &amp; Porter&rsquo;s Consumer Products &amp; Retail Industry Group for the next program in our Consumer Products &amp; Retail Navigator webinar series, focused on how companies can practically mitigate litigation and regulatory risk in an environment shaped by AI-driven features and influencer-led content.</p> <p>Today&rsquo;s consumer marketing moves at a rapid pace, especially when AI-driven features and influencer partnerships are involved. This session will provide practical tips for managing risk, including integrating disclosures, negotiating talent agreements, what claim substantiation should look like in practice, how to align performance and &ldquo;health-adjacent&rdquo; messaging with available evidence, and where common pitfalls arise from third-party content and digital UX claims. Attendees will leave with pragmatic tips for reducing risk while preserving compelling brand storytelling, as well as best practices for monitoring influencer content and compliance.</p>{19E7033F-1D9E-4F91-B205-6A063086B42A}https://www.arnoldporter.com/en/perspectives/events/2026/09/part-ii-biotech-deals-handling-of-complex-licensing-disputesPlease join Arnold &amp; Porter for Part II of our in-person series for legal and business leaders at biotechnology companies seeking to optimize their licensing and partnering strategies.Wed, 16 Sep 2026 00:00:00 -0500<p>Please join Arnold &amp; Porter for Part II of our in-person series for legal and business leaders at biotechnology companies seeking to optimize their licensing and partnering strategies.</p> <p>In this CLE program, our boardroom discussion shifts from &ldquo;<a rel="noopener noreferrer" href="https://www.linkedin.com/posts/biotech-pharmaceuticals-antitrust-ugcPost-7477464542315380736-1T6s/?utm_source=share&amp;utm_medium=member_desktop&amp;rcm=ACoAAAFLrp4BZMXUwX1tta9Tx-GBgU7udSfdAxc" target="_blank">Should you license the asset?</a>&rdquo; to &ldquo;What do you do when a deal goes wrong?&rdquo; Ten months after out-licensing a key asset, a fictional biotech confronts significant challenges with its partner due to several developments:</p> <ul> <li>Problems in manufacturing</li> <li>Clinical integrity and problems with the data</li> <li>IP challenges</li> <li>Milestone interpretation</li> <li>Liquidity pressures and a ticking clock</li> <li>A government inquiry</li> </ul> <p>Join Arnold &amp; Porter and your peers as you advise a Board of Directors on how to handle the complex disputes arising from their transaction.</p> <p><em>Please note that attendance at <a href="/en/perspectives/events/2026/06/part-i-biotech-deals-creating-optimal-licensing-and-partnering-arrangements" target="_blank">Part 1 of this series</a> is not necessary to participate in this disputes-focused Forum.</em></p>{119C61FD-4882-4B59-BD3D-611B31203AD1}https://www.arnoldporter.com/en/perspectives/advisories/2026/09/sterling-v-city-of-jackson-and-the-limits-of-substantive-due-process-in-environmental-harm-casesAllison B. Rumseyhttps://www.arnoldporter.com/en/people/r/rumsey-allison-ballison.rumsey@arnoldporter.comRyan Hartmanhttps://www.arnoldporter.com/en/people/h/hartman-ryanryan.hartman@arnoldporter.comThe Fifth Circuit, sitting <em>en banc</em>, issued its long-awaited decision in <em>Sterling v. City of Jackson</em>, No. 24-60370 (5th Cir. Sept. 4, 2026) &mdash; a case that tested whether residents exposed to lead-contaminated municipal drinking water and lied to about its safety could sue the responsible municipality and public officials under 42 U.S.C. &sect; 1983 for violating their substantive due process rights. In a 10-5 decision, the court said no, affirming dismissal of the plaintiffs&rsquo; constitutional claims and reversing the panel opinion that had allowed the case to proceed. See <em>Sterling v. City of Jackson</em>, 159 F.4th 361 (5th Cir. 2025), reh&rsquo;g en banc granted, opinion vacated, 167 F.4th 806 (5th Cir. 2026).Wed, 16 Sep 2026 00:00:00 -0500<p>The Fifth Circuit, sitting <em>en banc</em>, issued its long-awaited decision in <em>Sterling v. City of Jackson</em>, No. 24-60370 (5th Cir. Sept. 4, 2026) &mdash; a case that tested whether residents exposed to lead-contaminated municipal drinking water and lied to about its safety could sue the responsible municipality and public officials under 42 U.S.C. &sect; 1983 for violating their substantive due process rights. In a 10-5 decision, the court said no, affirming dismissal of the plaintiffs&rsquo; constitutional claims and reversing the panel opinion that had allowed the case to proceed. See <em>Sterling v. City of Jackson</em>, 159 F.4th 361 (5th Cir. 2025), <em>reh&rsquo;g en banc granted, opinion vacated</em>, 167 F.4th 806 (5th Cir. 2026). The majority&rsquo;s message is unambiguous: absent a right &ldquo;deeply rooted&rdquo; in history and tradition, environmental harms &mdash; even egregious, long-running, government-caused ones &mdash; belong to tort law and the political process, not the Constitution. The ruling carries direct implications for how environmental compliance failures by government officials get litigated going forward.</p> <p>Residents of Jackson, Mississippi alleged that the city&rsquo;s water system leached lead into the drinking supply as a result of years of mismanagement &mdash; including a &ldquo;catastrophic&rdquo; switch from high-pH well water to low-pH surface water &mdash; and that city officials then affirmatively told the public the water was safe when they knew, or should have known, otherwise. Plaintiffs alleged violations of the Safe Drinking Water Act and EPA regulations, and described repeated boil-water notices and system shutdowns. In addition to state-law tort claims, plaintiffs pursued a federal constitutional theory: that exposure to contaminated water violated their right to bodily integrity, and that being misled about its safety violated a right to truthful information from public officials.</p> <p>The <em>en banc</em> majority applied the <em>Glucksberg/Dobbs</em> &ldquo;history and tradition&rdquo; framework and held:</p> <ol> <li><strong>No right to be free from government-caused water contamination</strong>. The court reaffirmed that the Constitution imposes no affirmative duty on municipalities to provide services &mdash; even essential ones like water &mdash; &ldquo;in a reasonably competent fashion.&rdquo; <em>DeShaney v. Winnebago Cnty. Dep&rsquo;t of Soc. Servs.</em>, 489 U.S. 189, 197-98 (1989); see also <em>Youngberg v. Romeo</em>, 457 U.S. 307, 317 (1982); <em>Collins v. City of Harker Heights</em>, 503 U.S. 115, 129 (1992). It declined to stretch the bodily-integrity doctrine, which has historically covered things like forced medical procedures and sexual assault by police, to cover harm from contaminated infrastructure.</li> <li><strong>No right to truthful information from public officials during a public-health crisis</strong>. Following the Second Circuit&rsquo;s post-9/11 air-quality cases, the court held that misrepresentations by officials do not rise to a distinct constitutional tort absent a historical analog. <em>Lombardi v. Whitman</em>, 485 F.3d 73, 80, 85 (2d Cir. 2007); <em>Benzman v. Whitman</em>, 523 F.3d 119, 125, 128 (2d Cir. 2008) (&ldquo;no court has ever held a government official liable for denying substantive due process by issuing press releases or making public statements&rdquo;).</li> <li><strong>Qualified immunity would independently bar damages claims against the individual officials</strong>. Even assuming a right existed, it was not &ldquo;clearly established&rdquo; at the time of the alleged conduct, so individual officials would be shielded from damages in any event.</li> </ol> <h2>The Dissent: A Circuit Split Widens</h2> <p>Judge Haynes, joined by four other judges, would have adopted the state-created-danger doctrine &mdash; citing the 10 circuits that have already done so, including the D.C. and Ninth Circuits, see <em>Butera v. District of Columbia</em>, 235 F.3d 637, 652 (D.C. Cir. 2001); <em>Kennedy v. City of Ridgefield</em>,<span style="white-space: pre;"> </span>439 F.3d 1055, 1066 (9th Cir. 2006); <em>Irish v. Fowler</em>, 979 F.3d 65, 73-74 (1st Cir. 2020). The dissent would have also held that plaintiffs plausibly alleged a bodily-integrity violation at the pleading stage, taking an approach consistent with the Sixth Circuit&rsquo;s Guertin v. Michigan, 912 F.3d 907 (6th Cir. 2019) (the Flint water crisis case) and the more recent <em>Mitchell v. City of Benton Harbor</em>, 137 F.4th 420 (6th Cir. 2025). The dissent&rsquo;s core objection is procedural as much as substantive: at the Rule 12(b)(6) or 12(c) stage, plaintiffs are entitled to have well-pleaded facts taken as true and ambiguities resolved in their favor.</p> <p>The result is a clear circuit split: the Fifth and Second Circuits decline to constitutionalize certain contamination and official-misinformation harms, while the Sixth Circuit and a growing list of others are more willing to entertain bodily-integrity and state-created-danger theories in this context. That split, combined with the sharpness of the disagreement here, makes this a strong candidate for certiorari if plaintiffs seek further review.</p> <h2>Why This Matters for Environmental Practitioners</h2> <ul> <li><strong>Section 1983 is far less available (in the Fifth Circuit) as a fallback for contamination harms</strong>. Plaintiffs alleging lead, PFAS, or other contamination exposure from a public water system &mdash; or from state actors more broadly &mdash; cannot use constitutional tort theories to circumvent the more demanding proof requirements, damages caps, and immunities that typically apply to state tort claims. The court is explicit: the remedy lies in tort law, the ballot box, and existing regulatory enforcement (SDWA, Clean Water Act, EPA orders), not the Fourteenth Amendment.</li> <li><strong>The regulatory backstop argument carries real weight</strong>. The majority leaned heavily on the fact that EPA and the Mississippi State Department of Health had been actively monitoring and enforcing against the city for years, and that the federal government had, by then, taken over management of Jackson&rsquo;s water system pursuant to a separate SDWA/CWA enforcement action. Expect defendants in future contamination suits &mdash; municipal, industrial, or otherwise &mdash; to invoke ongoing or completed regulatory enforcement as evidence that adequate non-constitutional remedies exist, cutting against any due-process theory.</li> <li><strong>State-created danger remains unsettled in the Fifth Circuit &mdash; for now</strong>. The court&rsquo;s continued silence on the doctrine, rather than express rejection of it, leaves the door open for plaintiffs to attempt other theories, even as the court signals hostility.&nbsp;</li> <li><strong>Watch for certiorari</strong>. Given the depth of the circuit split (10 circuits versus the Fifth&rsquo;s continued silence on state-created danger, and now a direct conflict with the Sixth Circuit&rsquo;s <em>Guertin/Mitchell</em> line on bodily integrity), this case is a plausible Supreme Court candidate. Clients with relevant exposure in multiple circuits &mdash; including mining and industrial companies, utilities, and suppliers and service providers to municipalities &mdash; should watch this closely, since the outcome will shape whether affirmative government misconduct in environmental contamination cases can support substantive due-process liability on comparable allegations, or whether such claims remain confined to state tort and statutory enforcement frameworks.</li> </ul> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{D39F28E6-AD1D-4990-8695-E56767A61D9D}https://www.arnoldporter.com/en/perspectives/events/2026/09/should-i-stay-or-should-i-go-ma-in-practice-when-to-exit-and-how-to-preparecarlyn.williams@arnoldporter.com<p>Thinking about a sale down the road &mdash; or wondering if now&rsquo;s the time? Join Arnold &amp; Porter and Industria Partners at Colorado Startup Week for a candid conversation with founders who&rsquo;ve been through it. Hear directly from entrepreneurs who sold their companies, alongside the lawyers, bankers, wealth advisors, and investors who guide them, on how they knew it was time to sell and what it really takes to get deal ready.</p> <p>Lunch provided.</p>Tue, 15 Sep 2026 00:00:00 -0500{639BA95C-1F73-45CC-9797-39020B625B0D}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/09/brandon-neuschafer-speaks-to-corporate-counsel-on-californias-new-non-ultraprocessed-food-sealArnold &amp; Porter Consumer Products partner Brandon Neuschafer was quoted in the recent <em>Corporate Counsel </em>article, &ldquo;California's Proposed Non-Ultraprocessed Food Seal Adds to Complex Patchwork,&rdquo; discussing AB 2244, California's newly passed bill that would let the state accredit agents to certify foods as &ldquo;non-ultraprocessed.&rdquo;Mon, 14 Sep 2026 00:00:00 -0500<p>Arnold &amp; Porter Consumer Products partner Brandon Neuschafer was quoted in the recent <em>Corporate Counsel </em>article, &ldquo;California's Proposed Non-Ultraprocessed Food Seal Adds to Complex Patchwork,&rdquo; discussing AB 2244, California's newly passed bill that would let the state accredit agents to certify foods as &ldquo;non-ultraprocessed.&rdquo;</p> <p>Brandon said the approach could become a model other states and federal regulators look to as they weigh their own rules for the category. &ldquo;California requirements are such that they can create a baseline for industry,&rdquo; he said. &ldquo;It's part of the overall story of California taking the lead on regulating a new issue.&rdquo;</p> <p>He also noted the state's own rules do not fully align, since California separately restricted ultraprocessed foods in schools earlier this year under a different definition. &ldquo;There are going to be products that don't qualify for this non-UPF certification but can still be sold in schools,&rdquo; he said. &ldquo;To me, this creates more confusion for the consumer.&rdquo;</p> <p><a href="https://www.law.com/corpcounsel/2026/09/11/californias-proposed-non-ultraprocessed-food-seal-adds-to-complex-patchwork/">Read the full article</a> (subscription required).</p>{939563C6-5F8E-4343-A092-2BAE135E88E3}https://www.arnoldporter.com/en/perspectives/news/2026/09/arnold-porter-secures-dismissal-with-prejudice-of-putative-nationwide-class-action-against-joybirdArnold &amp; Porter secured dismissal with prejudice at the motion-to-dismiss stage of a putative nationwide class action against Joybird, a direct-to-consumer furniture brand. The plaintiffs alleged that Joybird used deceptive &ldquo;perpetual discount&rdquo; pricing by advertising markdowns from reference prices that were rarely, if ever, the actual selling prices.Mon, 14 Sep 2026 00:00:00 -0500<p>Arnold &amp; Porter secured dismissal with prejudice at the motion-to-dismiss stage of a putative nationwide class action against Joybird, a direct-to-consumer furniture brand. The plaintiffs alleged that Joybird used deceptive &ldquo;perpetual discount&rdquo; pricing by advertising markdowns from reference prices that were rarely, if ever, the actual selling prices.</p> <p>Joybird successfully argued that plaintiffs could not invoke the Terms of Use to bring a California-law claim. And because none of the proposed class members had made purchases in California, the court concluded that their claims based on California law failed as a matter of law and could not be cured through amendment.</p> <p>The Arnold &amp; Porter team was led by Alex Beroukhim, partner and co-chair of the Consumer Products &amp; Retail Industry Group, and associates Owen Connolly and Nina Leviten.</p>{7E95783D-9D19-47AA-977D-8A3FE524C4DF}https://www.arnoldporter.com/en/perspectives/advisories/2026/09/you-cant-un-ring-the-bell-or-the-assignment-bankruptcy-court-dismisses-chapter-11-casesBenjamin Mintzhttps://www.arnoldporter.com/en/people/m/mintz-benjaminbenjamin.mintz@arnoldporter.comJustin Imperatohttps://www.arnoldporter.com/en/people/i/imperato-justinjustin.imperato@arnoldporter.comIn <em>In re Nussbaum Lowinger LLP</em>, the Bankruptcy Court for the Southern District of New York (the Court) dismissed Chapter 11 bankruptcy cases commenced by two law firms and did so in favor of their assignment for the benefit of creditors proceeding already pending in New York state court. This decision provides useful guidance for creditors, assignees, and debtors evaluating whether to move from a state law assignment for the benefit of creditors to a federal bankruptcy case.Mon, 14 Sep 2026 00:00:00 -0500<p>In <em>In re Nussbaum Lowinger LLP</em>,[[N: Case No. 26-22383 (SHL), 2026 WL 2364645, at *1 (Bankr. S.D.N.Y. Aug. 14, 2026) (<em>Nussbaum Lowinger</em>).]] the Bankruptcy Court for the Southern District of New York (the Court) dismissed Chapter 11 bankruptcy cases commenced by two law firms and did so in favor of their assignment for the benefit of creditors proceeding already pending in New York state court. This decision provides useful guidance for creditors, assignees, and debtors evaluating whether to move from a state law assignment for the benefit of creditors to a federal bankruptcy case. Several practical points stand out from the <em>Nussbaum Lowinger</em> decision:</p> <ul> <li>First, a pending assignment proceeding with a demonstrated track record of investigation, litigation, and recoveries is powerful evidence supporting dismissal of a bankruptcy case in favor of allowing the assignment proceeding to continue.&nbsp;</li> <li>Second, the timing of the bankruptcy case relative to the commencement of the assignment proceeding matters. A bankruptcy case filed shortly after an assignment is accepted, before the state court proceeding has meaningfully progressed, sits in a very different posture than one filed many months later after meaningful progress had already been achieved in the assignment proceeding. The greater the head start of the assignment proceeding, the harder it will be to justify a late pivot to bankruptcy.&nbsp;</li> <li>Third, courts will scrutinize the motives behind a bankruptcy commenced with an assignment proceeding already pending. A bankruptcy filing that appears designed to frustrate specific recovery efforts, rather than to achieve a genuine reorganization or orderly liquidation, invites a bad faith finding under section 1112(b) of the Bankruptcy Code and dismissal of the bankruptcy case.&nbsp;</li> <li>Finally, debtors and their principals should not assume they can unilaterally terminate assignments after filing bankruptcy simply because the assignment agreement appears to provide that right. Indeed, postpetition actions that terminate or modify an existing assignment agreement are generally not ordinary course transactions and terminating such agreements postpetition requires notice, a hearing, and bankruptcy court approval under section 363 of the Bankruptcy Code before the termination becomes effective.&nbsp;</li> </ul> <h2>Background</h2> <p>Mark J. Nussbaum formed two entities to provide legal services, primarily in commercial real estate: Nussbaum Lowinger LLP and its predecessor, Mark J. Nussbaum and Associates PLLC (together, the Debtors). Beyond legal services, the Debtors also ran a lending business, including hard money lending, liquidity enhancement loans, and short-term bridge loans. The Debtors claim that certain escrow funds became depleted after a single client received substantial funds but could not repay them, eventually leaving the Debtors unable to close real estate transactions even where clients had properly escrowed the necessary funds.</p> <p>ABCMN LLC, a special purpose entity created to serve as the Assignee (the Assignee), tells a starkly different story. It contends the lending operation was in fact a Ponzi scheme run by Mr. Nussbaum and a real estate businessman named Mendel Steiner (who died in January 2025), and that hundreds of millions of dollars deposited into escrow were diverted to Mr. Nussbaum, and to Mr. Steiner and his family under the pretense of real estate investments. Things unraveled in January 2025, when the Debtors ceased operations after their escrow shortfalls came to light following a creditor lawsuit. </p> <p>Following the shutdown of the firms, Mr. Nussbaum was indicted on felony charges, including grand larceny, resigned from the practice of law, and was disbarred. In June 2025, the Debtors chose to pursue an assignment for the benefit of creditors under Article 2 of the New York Debtor and Creditor Law. Mr. Nussbaum executed a General Assignment for the Benefit of Creditors (the Assignment Agreement) in June 2025, in favor of the Assignee, and in August 2025, a New York state court formally commenced the assignment proceeding (the ABC Proceeding), appointing the Assignee.</p> <p>Notwithstanding the still ongoing ABC Proceeding, 10 months after Mr. Nussbaum executed the Assignment Agreement, in April 2026, the Debtors, through their newly appointed chief restructuring officer who Mr. Nussbaum selected, filed Chapter 11 bankruptcy petitions, asserting that the ABC Proceeding had &ldquo;stalled,&rdquo; making minimal progress towards effectuating asset recoveries or making distributions to creditors while the Debtors continued to be faced with several actions against them that were draining their resources. The Debtors also claimed that the bankruptcy court would be better positioned to address the Ponzi scheme allegations. </p> <p>Four days after the bankruptcy petition date, the Debtors&rsquo; chief restructuring officer sent the Assignee a letter purporting to terminate the Assignment Agreement outright. The Assignee moved to dismiss the Chapter 11 cases and asserted: (1) the Court should abstain from hearing the Chapter 11 cases under section 305(a) of the Bankruptcy Code in favor of the ABC Proceeding pending in New York state court; and (2) the Chapter 11 cases should be dismissed for cause under section 1112(b) of the Bankruptcy Code because of the Debtors&rsquo; bad faith in initiating the Chapter 11 cases, the lack of a legitimate bankruptcy purpose in pursuing the Chapter 11 cases, and the Debtors&rsquo; lack of authority to institute the Chapter 11 cases.[[N: The U.S. Trustee separately moved for the appointment of a Chapter 11 trustee if the cases were to remain in bankruptcy court. Every party in the Chapter 11 cases, including the Debtors, agreed that a Chapter 11 trustee should be appointed if the cases remained in bankruptcy court, given concerns about Mr. Nussbaum&rsquo;s fitness to serve as a fiduciary and the independence of his chosen restructuring officer. Because the Court dismissed the bankruptcy cases, it never reached the merits of the U.S. Trustee&rsquo;s motion, denying it as moot. The unanimous agreement on the need for a Chapter 11 trustee if the bankruptcy cases stayed in bankruptcy court appears to have reinforced the Court&rsquo;s conclusion that dismissal in favor of the existing ABC Proceeding in which the Assignee was already in place was the more efficient and appropriate path forward.&nbsp;]] The Court dismissed the Chapter 11 cases, holding that dismissal was warranted under Section 305 (abstention) and Section 1112 (bad faith).</p> <h2>The Court&rsquo;s Decision</h2> <p>Although abstention is viewed as an extraordinary remedy, Section 305(a) permits bankruptcy courts to dismiss or suspend cases if the interests of both the debtor and its creditors would be better served outside of bankruptcy. Courts typically consider seven factors to determine whether to dismiss or suspend a bankruptcy case under Section 305(a), including: (1) the economy and efficiency of administration; (2) whether another forum is available to protect the interests of both parties or there is already a pending proceeding in state court; (3) whether federal proceedings are necessary to reach a just and equitable solution; (4) whether there is an alternative means of achieving an equitable distribution of assets; (5) whether the debtor and the creditors are able to work out a less expensive out-of-court arrangement which better serves all interests in the case; (6) whether another insolvency proceeding has progressed so far that it would be costly and time consuming to start afresh under the Bankruptcy Code; and (7) the purpose for which bankruptcy jurisdiction has been sought.</p> <p>Here, the Court held that the application of these seven factors overwhelmingly favored abstention and dismissal of the Debtors&rsquo; Chapter 11 cases. According to the Court, the ABC Proceeding offered an available alternative forum capable of achieving an equitable distribution, and had already produced concrete results over nearly a year, including a claims bar date, extensive investigation and depositions of Mr. Nussbaum, multiple lawsuits including litigation against the estate of the deceased alleged co-conspirator, settlements exceeding $16 million dollars, and default judgments exceeding $300 million dollars. Against that record, the Court rejected the Debtors&rsquo; characterization of the ABC Proceeding as &ldquo;stalled,&rdquo; calling it a conclusory label unsupported by the evidence, and noted that courts have consistently dismissed bankruptcy cases in favor of assignment proceedings where the assignee has already made significant progress towards resolving the debtor&rsquo;s obligations.[[N: See, e.g., <em>In re Korean Radio Broadcasting, Inc.</em>, Case No. 19-46322-ess, 2020 WL 2047990, at *10-*11 (Bankr. E.D.N.Y. March 31, 2020) (dismissing an involuntary bankruptcy case where the petitioning creditors failed to present evidence that showed or even suggested that the pending assignment proceeding was inadequate or that the assignee in that proceeding was in some way compromised).]]</p> <p>The Court also distinguished <em>Nogin Com. LLC</em>,[[N: 670 B.R. 711 (Bankr. S.D.N.Y. 2025) (<em>Nogin</em>).]] wherein the <em>Nogin</em> court declined to abstain and dismiss a bankruptcy case under Section 305(a) in favor of a pending assignment proceeding. In <em>Nogin</em>, less than a month had passed between execution of the assignment agreement and the bankruptcy filing, and the state court had not yet even ruled on the motion to commence the assignment proceeding. When declining to abstain, the <em>Nogin</em> court highlighted that &ldquo;nothing substantial has occurred in the [a]ssignment [p]roceeding to date[;]&rdquo; and it &ldquo;is not the case that the [a]ssignment [p]roceeding has gone so far that it would be costly and time consuming to &lsquo;start afresh&rsquo; here.&rdquo; The Court thus distinguished<em> Nogin</em> because here, by contrast, the Assignment Agreement was nearly 10 months old and the state proceeding had been formally pending for more than eight months with substantial results already achieved, making a fresh start in bankruptcy needlessly costly and duplicative.</p> <p>The Court additionally found cause for dismissal under Section 1112(b) based on the totality of the circumstances, including the presence of bad faith. While some of the traditional badges of a bad faith filing were absent, i.e., the Debtors had multiple assets, an entirely unsecured creditor body, and this was not a two-party secured creditor dispute, the Court held the Debtors commenced the Chapter 11 cases in bad faith because they were not operating, had no employees and no cash flow, and had no reasonable likelihood of reorganizing or emerging from bankruptcy.</p> <p>Most significantly, though, the Court found the timing and sequence of events prepetition troubling. Prior to the bankruptcy petition date, the Assignee had filed a lawsuit against Mr. Nussbaum&rsquo;s personal attorney, alleging he was assisting Mr. Nussbaum in diverting assets that should have been turned over to the Assignee. The Assignee agreed to dismiss that lawsuit without prejudice in reliance on promised remedial steps from the attorney&rsquo;s law firm and Mr. Nussbaum that were never taken. Instead, the Debtors commenced their Chapter 11 cases, which, according to the Court, demonstrated that the bankruptcy filings may have been motivated by &ldquo;Mr. Nussbaum&rsquo;s desire to restart the process, with no plausible rationale other than to delay the discovery of additional assets.&rdquo; The Court also noted with concern that the Debtors had installed a chief restructuring officer with a familial connection to Mr. Nussbaum&rsquo;s former law partner, and that Mr. Nussbaum purported to terminate the ABC Proceeding and the Assignment Agreement unilaterally rather than seeking relief on notice to creditors or either court. Taken collectively, the Court concluded that the true purpose of the bankruptcy filings was to frustrate the Assignee&rsquo;s recovery efforts, not to pursue a genuine reorganization.</p> <p>The Assignee also moved to be excused from any turnover obligations under the Bankruptcy Code. Section 543(d)(2) excuses an assignee from turnover obligations where the assignee was appointed more than 120 days before the bankruptcy petition date, unless turnover is necessary to prevent fraud or injustice, and here, more than 10 months had passed since the assignment date. Even so, the Debtors asserted that the Assignee had to turn over estate assets because the Debtors terminated the Assignment Agreement pursuant to a contractual reservation of rights provision in it that authorized them to do so. The Court rejected this argument on multiple independent grounds, holding that: (1) as a matter of New York law, an accepted assignment for the benefit of creditors becomes irrevocable and cannot be undone without the consent of the state court that approved it; (2) a private contractual termination right cannot override the mandatory nature of Section 543(d)(2); and (3) the purported termination initiated postpetition was invalid under Section 363 as an unauthorized out of the ordinary course transaction.</p> <h2>Conclusion</h2> <p><em>Nussbaum Lowinger</em> illustrates that the upfront decision of whether to pursue an assignment for the benefit of creditors or a bankruptcy is significant. Parties should evaluate that choice with the expectation that it will, as a practical matter, be treated as final once the assignment proceeding has meaningfully progressed, and not as a reversible first step that can be abandoned for bankruptcy if circumstances change. The later in time a bankruptcy filing comes after an assignment has been accepted, and the more progress the assignee has made, the more a court will view any attempt to switch forums with suspicion, particularly where the timing suggests the filing was motivated by frustration with the assignee&rsquo;s approach rather than a genuine reorganization purpose. This means that debtors and principals who elect the assignment route should go in with clear eyes: dissatisfaction with the pace or direction of an assignment proceeding is not, standing alone, a basis to pivot to Chapter 11 once the assignee has built a record of investigation, litigation, and recoveries. Courts will not let a debtor use bankruptcy as a do-over merely because the state court process is not unfolding the way the debtor would like.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{26ED5C53-2380-410F-BD01-CB740EFDDFBD}https://www.arnoldporter.com/en/perspectives/news/2026/09/lmg-life-sciences-americas-recognizes-arnold-porters-life-sciences-capabilities-with-two-awardsThe 2026 <em>LMG Life Sciences Americas </em>Awards recognized Arnold &amp; Porter&rsquo;s life sciences capabilities with two awards at its annual ceremony on September 10, 2026.Fri, 11 Sep 2026 00:00:00 -0500<p>The 2026 <em>LMG Life Sciences Americas</em> Awards recognized Arnold &amp; Porter&rsquo;s life sciences capabilities with two awards at its annual ceremony on September 10, 2026.</p> <p>Partner Eva Temkin was named FDA Litigation &amp; Enforcement Attorney of the Year, recognizing her work advising life sciences clients on complex FDA regulatory and enforcement matters. Drawing on nearly a decade of experience at the FDA, Eva helps clients develop and execute regulatory, legislative, and litigation strategies. She serves as lead FDA counsel on complex litigation and financial transactions and advises clients on compliance, enforcement, regulatory mandates, and FDA disputes.</p> <p>The firm also received a Deal of the Year award for its representation of Boston Scientific Corporation on the antitrust aspects of its approximately $15 billion acquisition of Penumbra, Inc., the second-largest transaction in Boston Scientific&rsquo;s history. The matter was led by Michael Bernstein, Global Co-Chair of Arnold &amp; Porter&rsquo;s Antitrust/Competition practice group.</p> <p>Arnold &amp; Porter was shortlisted in 13 additional categories. The firm&rsquo;s integrated life sciences team advises clients across antitrust and competition, regulatory, transactional, intellectual property, and litigation matters, including complex regulatory approvals, investigations, and litigation.</p>{23929F11-14EF-401D-8F1B-4EE5E0DA18F8}https://www.online-hero.nl/art/5750/recent-developments-in-cross-border-restructuring-under-chapter-15-of-the-bankruptcy-codeBenjamin Mintzhttps://www.arnoldporter.com/en/people/m/mintz-benjaminbenjamin.mintz@arnoldporter.comJustin Imperatohttps://www.arnoldporter.com/en/people/i/imperato-justinjustin.imperato@arnoldporter.comFri, 11 Sep 2026 00:00:00 -0500{E4470B1E-CAFD-48CB-A41B-AE17CA93BDAC}https://www.arnoldporter.com/en/perspectives/news/2026/09/latin-lawyer-250s-2027-edition-recognizes-arnold-porters-work-in-latin-americaIn the recently released 2027 edition, <em>Latin Lawyer 250</em> featured Arnold &amp; Porter for its work in Latin America.Thu, 10 Sep 2026 00:00:00 -0500<p>In the recently released 2027 edition, <em>Latin Lawyer 250</em> featured Arnold &amp; Porter for its work in Latin America. The guide, which profiles &ldquo;the leading business law firms of Latin America,&rdquo; highlighted 15 of the firm's attorneys for their experience in the following practice areas: Anti-Corruption Investigations and Compliance; Arbitration; Banking &amp; Finance; Capital Markets; and Pro Bono.</p> <p><em>Latin Lawyer</em> cited Arnold &amp; Porter&rsquo;s &ldquo;distinctive blend of sovereign finance, banking regulation and capital markets experience,&rdquo; which &ldquo;holds particular appeal for Latin American governments navigating complex funding and financial-sector challenges.&rdquo; The firm&rsquo;s Banking &amp; Finance practice was recognized for advising sovereigns, central banks, multilateral institutions, and corporate clients on complex cross-border financings throughout Latin America, particularly where financing structures intersect with public policy, development objectives, derivatives regulation, or foreign-exchange management.</p> <p>The publication also noted that the firm &ldquo;sets itself apart through deep expertise in sovereign finance, arbitration and investigations &ndash; areas that have consistently driven its regional success.&rdquo; Beyond its sovereign finance work, <em>Latin Lawyer</em> highlighted Arnold &amp; Porter&rsquo;s investor-state arbitration practice as &ldquo;equally remarkable, underpinned by an outstanding global track record,&rdquo; as well as the firm&rsquo;s ability to &ldquo;draw on its valuable connections within the US government to the benefit of regional clients.&rdquo; It also reported that the firm &ldquo;has become the counsel of choice for numerous Latin American governments involved in sensitive disputes,&rdquo; and that Arnold &amp; Porter&rsquo;s &ldquo;representation of governments and state-owned entities in sovereign debt issuances and arbitrations, spanning nearly half a century, creates a competitive advantage that few rivals can replicate.&rdquo;</p> <p>The guide also recognized the firm&rsquo;s public policy group, which &ldquo;serves both companies operating in Latin America and Latin American businesses expanding into the US market, addressing legal matters and helping clients navigate complex political environments,&rdquo; and its anti-corruption investigations and compliance team, which &ldquo;combines former prosecutors, sanctions specialists, national-security officials and anti-corruption practitioners.&rdquo;</p> <p>Arnold &amp; Porter also represents international investors and strategic businesses for M&amp;A transactions in Latin America, and Latin American companies expanding into the U.S. The firm&rsquo;s work in Latin America was also recently recognized by <em><a href="/en/perspectives/news/2026/08/news">Chambers Latin America</a></em>, the <em><a href="/en/perspectives/news/2026/04/lacca-recognizes-arnold-porter">Latin American Corporate Counsel Association</a></em>, and <em><a href="/en/perspectives/news/2026/07/latinvex-again-ranks-arnold-porter-among-top-international-law-firms-in-latin-america">Latinvex</a></em>.</p>{5877CADA-B1A4-4366-8991-6B37ECE21386}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/09/howard-sklamberg-discusses-fda-authorization-standards-for-nicotine-pouches-in-cbs-newsHoward Sklamberg, Arnold &amp; Porter Life Sciences &amp; Healthcare Regulatory partner and former Deputy Commissioner for Global Regulatory Operations and Policy at the U.S. Food and Drug Administration (FDA), was recently quoted in the <em>CBS News</em> article, &ldquo;Bureau of Prisons Faces Scrutiny Over Startup&rsquo;s Exclusive Deal to Sell Non-FDA-Authorized Nicotine Pouches to Prisoners,&rdquo; which examines a Bureau of Prisons arrangement allowing a newly formed Florida company to serve as the exclusive supplier of flavored nicotine pouches to federal prison commissaries, despite the product lacking FDA authorization for sale in the U.S.&nbsp;Thu, 10 Sep 2026 00:00:00 -0500<p>Howard Sklamberg, Arnold &amp; Porter Life Sciences &amp; Healthcare Regulatory partner and former Deputy Commissioner for Global Regulatory Operations and Policy at the U.S. Food and Drug Administration (FDA), was recently quoted in the <em>CBS News</em> article, &ldquo;Bureau of Prisons Faces Scrutiny Over Startup&rsquo;s Exclusive Deal to Sell Non-FDA-Authorized Nicotine Pouches to Prisoners,&rdquo; which examines a Bureau of Prisons arrangement allowing a newly formed Florida company to serve as the exclusive supplier of flavored nicotine pouches to federal prison commissaries, despite the product lacking FDA authorization for sale in the U.S. </p> <p>The article notes that only two companies currently hold FDA authorization to sell nicotine pouches, underscoring how narrow a path the agency has cleared for products to reach the market legally. Drawing on his time overseeing FDA enforcement, Howard explained why that bar is so difficult for a company to clear. &ldquo;It is a very big deal to file one of these applications. You spend a lot of money on consultants. You have to have a lot of science. It&rsquo;s not a box-checking exercise,&rdquo; he said.</p> <p><a rel="noopener noreferrer" href="https://www.cbsnews.com/news/bureau-prisons-nicotine-pouches-prisoners/" target="_blank">Read the full article</a>. </p>{51B3CBBB-AA47-4289-83DF-3486D5679B07}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/09/travis-annatoyn-unpacks-data-center-moratorium-litigation-in-law360Travis Annatoyn, counsel at Arnold &amp; Porter, was quoted in the recent <em>Law360</em> article, &ldquo;Developers Allege Data Center Bans Defy Due Process,&rdquo; which examined a wave of lawsuits filed by data center developers against city and county governments over recently enacted construction moratoriums.Thu, 10 Sep 2026 00:00:00 -0500<p>Travis Annatoyn, counsel at Arnold &amp; Porter, was quoted in the recent <em>Law360</em> article, &ldquo;Developers Allege Data Center Bans Defy Due Process,&rdquo; which examined a wave of lawsuits filed by data center developers against city and county governments over recently enacted construction moratoriums.</p> <p>Travis, who served as deputy solicitor for energy and mineral resources at the U.S. Department of the Interior during the Biden administration, pointed to competition over land and infrastructure resources as a driver of the pushback against data centers. &ldquo;What we see nationwide is a lot of energy from citizen groups, from landowners, competitors over scarce resources, for example, water use or electricity, really emptying the playbook against data centers,&rdquo; he said. </p> <p>He added that while the technology is new, the underlying legal claims are not: &ldquo;These are all complaints brought by developers who are frustrated that the municipality, the county, whatever the local land use authority is, has denied them what they believe to be their right to use land and for the reasons they purchased the property or have invested in the property. That is a very old, common type of dispute.&rdquo;</p> <p><a rel="noopener noreferrer" href="https://www.law360.com/real-estate-authority/articles/2517203?" target="_blank">Read the full article</a> (subscription required).</p>{97FEA0F3-98CD-4934-BC38-18F9C883F614}https://www.biosliceblog.com/2026/09/reform-of-uk-modern-slavery-acts-supply-chain-reporting-regime/Tom Foxhttps://www.arnoldporter.com/en/people/f/fox-tomTom.Fox@arnoldporter.comHeba Jalilhttps://www.arnoldporter.com/en/people/j/jalil-hebaheba.jalil@arnoldporter.comThu, 10 Sep 2026 00:00:00 -0500{29B90488-DB25-4705-A699-5209CFC1FED6}https://clsbluesky.law.columbia.edu/2026/09/10/arnold-porter-discusses-end-of-sec-responses-to-no-action-requests-on-shareholder-proposals/Sara Adlerhttps://www.arnoldporter.com/en/people/a/adler-sarasara.adler@arnoldporter.comJoel I. Greenberghttps://www.arnoldporter.com/en/people/g/greenberg-joel-ijoel.greenberg@arnoldporter.comThu, 10 Sep 2026 00:00:00 -0500{32CF407D-51C5-4639-B2BB-128138EC366A}https://www.arnoldporter.com/en/perspectives/advisories/2026/09/treasury-and-irs-issue-proposed-regulations-on-racial-nondiscrimination-requirementsJames P. Josephhttps://www.arnoldporter.com/en/people/j/joseph-james-pjames.joseph@arnoldporter.comSusan Kopfhttps://www.arnoldporter.com/en/people/k/kopf-susansusan.kopf@arnoldporter.comBurden H. Walkerhttps://www.arnoldporter.com/en/people/w/walker-burden-hburden.walker@arnoldporter.comBridget M. Weisshttps://www.arnoldporter.com/en/people/w/weiss-bridget-mbridget.weiss@arnoldporter.comOn September 3, 2026, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) released proposed regulations that would deny or allow revocation of tax exemption under section 501(c)(3) of the Internal Revenue Code (Code) to any private school that adopts, maintains, or enforces a policy or practice discriminating on the basis of race, color, or national or ethnic origin, including any affirmative action policies of the sort the Supreme Court held unconstitutional in <em>Students for Fair Admissions, Inc. v. President and Fellows of Harvard College</em>, 600 U.S. 181 (2023) (SFFA).&nbsp;Thu, 10 Sep 2026 00:00:00 -0500<p>On September 3, 2026, the U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) released <a rel="noopener noreferrer" href="https://public-inspection.federalregister.gov/2026-18127.pdf" target="_blank">proposed regulations</a> that would deny or allow revocation of tax exemption under section 501(c)(3) of the Internal Revenue Code (Code) to any private school that adopts, maintains, or enforces a policy or practice discriminating on the basis of race, color, or national or ethnic origin, including any affirmative action policies of the sort the Supreme Court held unconstitutional in <em>Students for Fair Admissions, Inc. v. President and Fellows of Harvard College</em>, 600 U.S. 181 (2023) (<em>SFFA</em>). The <a rel="noopener noreferrer" href="https://home.treasury.gov/news/press-releases/sb0621" target="_blank">Treasury press release</a> accompanying the proposal states that it delivers on the administration&rsquo;s executive orders addressing discrimination in education. Despite its focus solely on schools, the proposed regulations could also impact donors that fund scholarships and certain academic programs and be used as a stepping stone to applying the administration&rsquo;s definition of discrimination against other tax-exempt organizations.</p> <p>The proposed regulations, which were published in the <em>Federal Register</em> on September 4, 2026, are a notice of proposed rulemaking and do not have immediate operative effect. If finalized as proposed, the rule would apply to taxable years beginning on or after May 31, 2027. Comments and requests for a public hearing are due November 3, 2026 (60 days after its publication in the <em>Federal Register</em>).</p> <h2>Background</h2> <p>Under longstanding precedent, eligibility for tax-exempt status under Code section 501(c)(3) is conditioned on satisfying a common law charitable standard that requires an organization to serve a public purpose and to operate consistently with established public policy. In <em>Bob Jones University v. United States</em>, 461 U.S. 574 (1983), the Supreme Court held that a private school practicing racial discrimination could not qualify as tax-exempt because such discrimination violates a fundamental public policy against racial discrimination in education.&nbsp;</p> <p>At the same time, in revenue rulings and guidance, the IRS had made clear that affirmative action programs that were intended to redress historic discrimination among certain minorities did not run afoul of the public purpose doctrine. Most notably, Revenue Procedure 75-50 provides guidelines for determining whether private schools have racially nondiscriminatory policies as to students. The proposed regulations would update the nondiscrimination standard by introducing a new Treasury regulation that incorporates the Supreme Court&rsquo;s <em>SFFA</em> decision and deletes the provisions of Revenue Procedure 75-50 that permitted schools to maintain programs favoring racial minority groups to further a school&rsquo;s nondiscrimination policy.</p> <h2>The Proposed Regulations</h2> <p>The proposed rule would add Treasury Regulation &sect; 1.501(c)(3)-2, providing that a private school is not operated exclusively for exempt purposes, and therefore does not qualify for tax-exempt status under Code section 501(c)(3), if it &ldquo;adopts, maintains, or enforces any policy or practice that discriminates on the basis of race, color, or national or ethnic origin&rdquo; in any of the following areas:</p> <ul> <li>The administration of any educational policy</li> <li>Admissions policies</li> <li>Scholarship and loan programs</li> <li>Athletic programs</li> <li>Any &ldquo;other school-administered or school-supported program&rdquo;</li> </ul> <p>Covered &ldquo;private schools&rdquo; include private primary, secondary, preparatory, and high schools, professional or trade school, colleges and universities. Governmental units, instrumentalities of governmental units, and schools owned or operated by such governmental entities are excluded.</p> <p>The preamble of the proposed rule preserves the ability of private schools to maintain a religious mission, curriculum, or program of religious observance and provides that religious schools may continue to select students on the basis of genuine religious affiliation or membership. This accommodation is not reflected in the text of proposed &sect; 1.501(c)(3)-2. Therefore, it is relevant in interpreting the regulations, but it is not binding legal authority.</p> <p>In the preamble to the proposed regulations, Treasury also states that schools may continue to use alternative criteria (such as income, geographic location, and first-generation status) to expand educational opportunity. This carve-out is not included in the proposed regulations themselves and is directly contrary to guidance issued by the U.S. Department of Justice (DOJ) on July 25, 2025, which stated that facially neutral criteria (e.g., &ldquo;cultural competence,&rdquo; &ldquo;lived experience,&rdquo; geographic targeting) that function as proxies for race and other protected characteristics violate federal law if designed or applied with the intention of advantaging or disadvantaging individuals based on protected characteristics. This leaves open to doubt the extent to which schools and donors can rely on these types of alternative criteria in formulating scholarship, academic programs, and other activities.</p> <h2>Key Takeaways</h2> <p>The proposed regulations are a notice of proposed rulemaking and do not currently change existing law or impose new requirements on private schools, and, even if finalized, the rule would apply only to taxable years beginning on or after May 31, 2027. The preamble to the proposed regulations state that they no more than update IRS regulations and guidance to conform to the Supreme Court&rsquo;s decision in <em>SFFA</em>. The proposed regulations, however, can be read as having much broader impact. As it is with the <em>SFFA</em> decision itself, the real question will be how broadly IRS chooses to interpret that decision in applying it to post-<em>SFFA</em> admissions programs and what, if any, authority the decision carries outside of the admissions context.</p> <p>For postsecondary institutions, the proposed regulations extend exposure to scholarship and loan programs, including donor-restricted endowed funds with race-based eligibility criteria, as well as other policies and programs. For private K-12 schools, who were not bound by <em>SFFA</em>, both admissions and aid are now measured against a standard drawn from a decision that did not apply to them, in addition to the broader applications included in the proposed regulations.</p> <p>The preamble contemplates that schools can substitute geographic, income, or first-generation criteria for race-based eligibility, and concludes that donors could achieve substantially similar outcomes on that basis. The DOJ&rsquo;s July 2025 guidance on diversity, equity and inclusion (DEI) programs takes a different view of the same criteria. As <a href="/en/perspectives/blogs/enforcement-edge/2025/08/doj-issues-sweeping-guidance-on-dei-programs">we discussed when the guidance issued</a>, DOJ reads &ldquo;nondiscrimination&rdquo; expansively, treating facially neutral standards, including first-generation status and residence in an underserved geographic area, as potentially unlawful where they are chosen as substitutes for a protected characteristic. That guidance is non-binding and does not govern the IRS&rsquo; administration of &sect; 501(c)(3), but the two documents point in opposite directions on the same criteria.</p> <p>The preamble also expressly cites recent executive orders, including <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2025/01/31/2025-02097/ending-illegal-discrimination-and-restoring-merit-based-opportunity" target="_blank">Executive Order 14173</a> (January 21, 2025, directing plans to deter illegal discrimination including in higher education) and <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2025/04/28/2025-07377/reinstating-commonsense-school-discipline-policies" target="_blank">Executive Order 14280</a> (April 23, 2025, directing action to prevent racial discrimination in school discipline), as evidence of Executive Branch commitment to eliminating racial discrimination. The proposed regulations&rsquo; reliance on these recently released executive orders as evidence of fundamental public policy is notable and may be a significant warning sign that the administration will rely on such recent executive orders in taking enforcement actions against tax-exempt organizations.</p> <p>The operative rule in the proposed regulations is confined to private educational organizations described in Code section 170(b)(1)(A)(ii). However, the analysis noted in the preamble could potentially be invoked in future guidance extending beyond schools to other categories of Code section 501(c)(3) organizations and beyond racial discrimination.</p> <h2>Looking Ahead</h2> <p>Given the proposed regulations will not be final until May 2027, the most important next step is for tax-exempt organizations, not just schools, to consider filing comments with Treasury and the IRS to clarify the many questions left open by the current draft. The possibility that these regulations could be expanded to other tax-exempt organizations and the ability of the IRS to revoke section 501(c)(3) status based on the final regulations make the review and comment process critically important to the tax-exempt sector.</p> <p>With extensive experience developing comment letters on proposed rules, Arnold &amp; Porter regularly assists clients in preparing comments on proposed agency actions. The team can help educational institutions and other affected organizations assess the proposed regulations, develop and submit comments, and review admissions, scholarship, athletics, and other school-supported policies and donor-restrictions. The team will monitor submitted public comments, finalization of the regulations, and any litigation or enforcement developments affecting tax-exempt organizations.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{4EBB0B13-752A-4206-A3FF-2BF848777DFC}https://www.arnoldporter.com/en/perspectives/events/2026/09/from-the-ehr-to-the-algorithm-ai-and-data-licensing-governance-and-risk-for-health-systemsjami.vibbert@arnoldporter.comAI is transforming patient data into one of health care's most valuable assets &mdash; and hospital and health system counsel are being asked to manage transactions they were never trained for.Wed, 09 Sep 2026 00:00:00 -0500<p>AI is transforming patient data into one of health care&rsquo;s most valuable assets &mdash; and hospital and health system counsel are being asked to manage transactions they were never trained for. From de-identification strategy and state AI and privacy law compliance to fine-tuned model ownership, the contracting and governance challenges are new, complex, and consequential. This session gives in-house counsel a practical roadmap for navigating them.</p> <h2>Webinar Series Alert</h2> <strong>Part II: Federal Executive Order Landscape in Year 2 of Trump 2.0&mdash;Implications for Hospitals</strong><br /> Wednesday, October 7<br /> 11 a.m.-noon ET<br /> Speakers: Bridget Weiss and Susan Kopf<br /> <br /> <strong>Part III: Midterm Election Implications for Hospitals and Health Systems</strong><br /> November<br /> Speakers: Eugenia Pierson, Kevin O&rsquo;Neil, Rep. Ron Kind, Sonja Nesbit{6A21E95A-4B5B-4C9C-8379-25044B8AE9E6}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/09/ambassador-barbara-leaf-reflects-on-six-months-of-the-iran-war-in-the-associated-pressArnold &amp; Porter Senior International Policy Advisor and former U.S. Ambassador Barbara Leaf was quoted by the <em>Associated Press</em> article, &ldquo;Six months on, the Iran war has changed the Middle East, but not in the way its architects had hoped,&rdquo; which examines how war with Iran has reshaped the Middle East, including the conflict's impact on Iran's leadership and regional influence.Wed, 09 Sep 2026 00:00:00 -0500<p>Arnold &amp; Porter Senior International Policy Advisor and former U.S. Ambassador Barbara Leaf was quoted by the <em>Associated Press</em> article, &ldquo;Six months on, the Iran war has changed the Middle East, but not in the way its architects had hoped,&rdquo; which examines how war with Iran has reshaped the Middle East, including the conflict's impact on Iran's leadership and regional influence.</p> <p>Amb. Leaf highlights the longer-term diplomatic challenge posed by an emboldened Iranian leadership, observing that rather than weakening Iran's government as intended, the conflict has resulted in a "hardened and very radical regime." "That is going to be exceptionally difficult to deal with, to say the least," she said. Amb. Leaf added that Iran's "confidence has grown over the months that it cannot only survive, but it can prevail, it can reset the regional landscape."</p> <p><a rel="noopener noreferrer" href="https://apnews.com/article/iran-us-war-six-months-israel-mideast-1685cdc4e6ef330406e0ebe242b21e70" target="_blank">Read the full article</a>.</p>{46F0B93F-D99F-4AEA-BEF0-B562B5B2D663}https://www.arnoldporter.com/en/perspectives/news/2026/09/arnold-porter-secures-eighth-circuit-victory-for-aig-in-insurance-coverage-disputeOn September 3, Arnold &amp; Porter secured an appellate victory for AIG when the U.S. Court of Appeals for the Eighth Circuit reversed a district court ruling that required AIG subsidiary Commerce and Industry Insurance Company (Commerce) to provide $25 million in coverage to XTO Energy, Inc. &mdash; a subsidiary of Exxon &mdash; in an insurance coverage dispute arising from an explosion at an oil and gas well in North Dakota.Wed, 09 Sep 2026 00:00:00 -0500<p>On September 3, Arnold &amp; Porter secured an appellate victory for AIG when the U.S. Court of Appeals for the Eighth Circuit reversed a district court ruling that required AIG subsidiary Commerce and Industry Insurance Company (Commerce) to provide $25 million in coverage to XTO Energy, Inc.&mdash;a subsidiary of Exxon&mdash;in an insurance coverage dispute arising from an explosion at an oil and gas well in North Dakota.</p> <p>The Eighth Circuit held that a pollution exclusion in Commerce&rsquo;s umbrella policy barred coverage and that XTO&rsquo;s failure to satisfy a 21-day notice condition prevented XTO from invoking an exception to the exclusion to restore coverage. The court also rejected XTO&rsquo;s arguments that Commerce was required to demonstrate prejudice from the late notice and that Commerce&rsquo;s policy should be read to incorporate additional exceptions included in the underlying policy. The panel unanimously reversed the district court&rsquo;s judgment and vacated the award of $25 million in damages, as well as interest, attorneys&rsquo; fees, and costs.</p> <p>The decision was recognized with a shout-out by <em>The American Lawyer</em>&rsquo;s <a rel="noopener noreferrer" href="https://www.law.com/litigationdaily/2026/09/11/litigator-of-the-week-runners-up-and-shout-outs/" target="_blank">Litigator of the Week column</a>.</p> <p>The Eighth Circuit&rsquo;s opinion marks the third appellate victory in the past month for Arnold &amp; Porter, following wins in the Tenth Circuit for AstraZeneca and in the D.C. Circuit for an international hotelier in a cross-border RICO dispute.</p> <p>The Arnold &amp; Porter team representing AIG was led by partner Reeves Anderson, senior associate Sam Callahan, and associate Casey Corcoran.</p>{538BF243-6158-4E77-AEB9-57C4C4DD7FEE}https://www.arnoldporter.com/en/perspectives/advisories/2026/09/china-issues-draft-anti-cross-border-corruption-lawJohn Tanhttps://www.arnoldporter.com/en/people/t/tan-johnjohn.tan@cn.arnoldporter.comSiyi Guhttps://www.arnoldporter.com/en/people/g/gu-siyisiyi.gu@cn.arnoldporter.comChuqiao Yuhttps://www.arnoldporter.com/en/people/y/yu-chuqiaochuqiao.yu@cn.arnoldporter.comOn August 28, 2026, the Standing Committee of the National People's Congress (NPC) released the Draft Anti-Cross-Border Corruption Law (中华人民共和国反跨境腐败法(草案), the Draft ACBCL) for public comment. If enacted, the Draft ACBCL would be China&rsquo;s first comprehensive law addressing cross-border corruption. Although the Draft ACBCL does not define new crimes, it establishes processes for inter-agency and international cooperation in the investigation of cross-border corruption, and has the potential to affect companies&rsquo; compliance programs and the conduct of cross-border investigations. Comment on the draft is due by September 26, 2026.Wed, 09 Sep 2026 00:00:00 -0500<p>On August 28, 2026, the Standing Committee of the National People's Congress (NPC) released the Draft Anti-Cross-Border Corruption Law (中华人民共和国反跨境腐败法(草案), the Draft ACBCL) for public comment. If enacted, the Draft ACBCL would be China&rsquo;s first comprehensive law addressing cross-border corruption. Although the Draft ACBCL does not define new crimes, it establishes processes for inter-agency and international cooperation in the investigation of cross-border corruption, and has the potential to affect companies&rsquo; compliance programs and the conduct of cross-border investigations. Comment on the draft is due by September 26, 2026. </p> <h2>Background and Context</h2> <p>Over the past decade, China has revised its anti-corruption framework through amendments to the Anti-Unfair Competition Law (AUCL), Criminal Law, and Supervision Law. In 2011, the 8th amendment to the Criminal Law first established the crime of bribing foreign government officials and personnel of international organizations. Nevertheless, in practice, this crime was rarely charged. </p> <p>The Draft ACBCL consolidates these laws, providing a framework for the investigation and prosecution of bribery of foreign officials, bribery involving Chinese officials, and other corrupt conduct with a cross-border nexus. The Draft ACBCL establishes a national working mechanism led by the National Supervisory Commission (NSC) and involving numerous government agencies, signaling a more coordinated enforcement model. The Draft ACBCL also incorporates China&rsquo;s anti-sanctions laws, authorizing countermeasures in response to foreign anti-corruption measures deemed improper, and imposes compliance obligations on companies engaged in cross-border business. </p> <h2>Key Provisions of the Draft ACBCL</h2> <p><strong>Jurisdiction (Article 3)</strong>. The draft ACBCL defines &ldquo;cross-border corruption&rdquo; broadly to cover:</p> <ul> <li>Bribery of foreign public or international organization officials by PRC citizens or entities, including their subsidiaries</li> <li>Bribery of foreign public or international organization officials by overseas individuals or entities, including their subsidiaries, where the misconduct occurs in China</li> <li>Bribery of PRC public officials by foreign persons or entities</li> <li>Other overseas corruption by PRC citizens or entities, including embezzlement, abuse of power, dereliction of duty, rent-seeking, improper transfers of value, and similar offenses</li> <li>Corrupt conduct occurring partly or wholly abroad that produces effects in China</li> <li>The cross-border flight of individuals suspected of corrupt conduct or assets implicated in corrupt conduct</li> </ul> <p><strong>Counter-Sanctions (Article 6)</strong>. If foreign countries impose discriminatory restrictions on Chinese citizens or entities under the guise of anti-corruption enforcement, Chinese regulators will take counter measures in accordance with the Anti-Foreign Sanctions Law and other relevant legislation. </p> <p><strong>Whistleblower Protection and Rewards (Article 17)</strong>. Any organization or individual may report cross-border corruption, with confidentiality, protection, and rewards for useful information. The draft ACBCL does not, however, specify the criteria for or value of the rewards. </p> <p><strong>Duty to Cooperate (Article 18)</strong>. When dealing with serious cases of cross-border corruption, government agencies may require foreign companies&rsquo; overseas headquarters to cooperate with investigations or enforcement measures. However, this article does not specify what types of cooperation the overseas entities should provide, and also does not specify whether refusing to cooperate would lead to any negative impact on the foreign companies or their Chinese subsidiaries.</p> <p><strong>Restrictions on suspects (Article 19)</strong>. Personnel suspected to be involved in cross-border corruption cases may be restricted from leaving China, i.e., &ldquo;exit bans.&rdquo;</p> <p><strong>Blocking provision (Article 26)</strong>. Foreign entities may not conduct law enforcement activities (执法活动) in China without Chinese government approval, including anti-corruption investigations. Entities and individuals in China may not provide evidence or assistance to foreign entities&rsquo; law enforcement activities without such approval. The context of Article 26 suggests this restriction primarily targets investigations conducted by foreign government agencies such as the U.S. Department of Justice or the UK Serious Fraud Office. </p> <p><strong>Compliance obligations (Articles 29-34)</strong>. Article 29 defines &ldquo;companies engaged in cross-border business&rdquo; as both PRC companies with overseas subsidiaries or investments as well as the China subsidiaries of foreign companies. Articles 30-34 require these companies to develop and maintain compliance management systems, conduct risk assessments and reporting, keep true and complete books and records, perform third-party due diligence and oversight, and provide integrity training to employees. It is also unclear whether regulators will enforce these provisions as part of an investigation into corrupt misconduct, or whether regulators will claim authority to proactively review companies&rsquo; compliance programs. </p> <p><strong>Self-reporting (Articles 31 and 43)</strong>. Like the Foreign Corrupt Practices Act Unit and UK Bribery Act, the Draft ACBCL encourages companies to self-report their cross-border corrupt misconduct, and treats self-reporting as a mitigating factor. However, the Draft ACBCL does not clarify whether self-reporting is voluntary or mandatory.</p> <p><strong>Obstruction penalties (Article 44)</strong>. Refusing to provide evidence, concealing or destroying evidence, or obstructing an investigation may lead to orders to correct misconduct, fines and detention by public security agencies, and/or criminal liability. It remains unclear whether these penalties would be imposed on a Chinese subsidiary if a company&rsquo;s foreign headquarters refuses to cooperate with such an investigation.</p> <p><strong>Penalties for compliance failures (Article 45)</strong>. Failure to carry out the compliance obligations described above (Articles 29-34) may result in the company being ordered to suspend or reorganize its business operations or the revocation of the company&rsquo;s business licenses.</p> <h2>Key Takeaways</h2> <p>The Draft ACBCL is a significant development in China&rsquo;s legal framework for anti-corruption, with potential implications for both compliance programs and cross-border investigations.</p> <ul> <li><strong>China&rsquo;s first consolidated cross-border anti-corruption statute</strong>. The Draft ACBCL signals a significant escalation in China&rsquo;s enforcement ambitions and its efforts to address cross-border corruption through a single, dedicated framework.</li> <li><strong>Familiar compliance architecture</strong>. Although most of the compliance obligations set forth in the draft are common in mature compliance programs, companies would still be well advised to review their China compliance programs to ensure they are in line with regulators&rsquo; expectations.&nbsp;</li> <li><strong>Remaining ambiguity</strong>. The duty to cooperate and penalties for obstruction of investigations raise questions about how they will be applied to foreign headquarters and Chinese subsidiaries, particularly if a company&rsquo;s foreign headquarters decline to cooperate with a Chinese investigation. It remains unclear whether self-reporting is voluntary or mandatory under the Draft ACBCL.&nbsp;</li> </ul> <p><em>This Advisory is based on the publicly released draft text of the Anti-Cross-Border Corruption Law (中华人民共和国反跨境腐败法（草案）) as of August 28, 2026. The Draft ACBCL is subject to revision during the legislative process. This Advisory is for general informational purposes and does not constitute legal advice.</em></p> <p>If you have questions about the Draft ACBCL or its implications for your business, please reach out to the authors or any of their colleagues in Arnold &amp; Porter&rsquo;s <a href="/en/services/capabilities/practices/white-collar-defense-and-investigations">White Collar Defense &amp; Investigations</a>&nbsp;practice group.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{465E3BD7-67C0-49C0-A161-FF9784012577}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/09/carlos-lobo-discusses-renewed-latin-american-investment-cycle-in-bnamericasArnold &amp; Porter Mergers &amp; Acquisitions partner Carlos Lobo was interviewed for the <em>BNamericas</em> article, &ldquo;Geopolitical shifts, friendlier governments spark new Latin American investment cycle,&rdquo; which examines renewed investor interest in Latin America amid geopolitical shifts and the emergence of more market-friendly governments across the region.&nbsp;Tue, 08 Sep 2026 00:00:00 -0500<p>Arnold &amp; Porter Mergers &amp; Acquisitions partner Carlos Lobo was interviewed for the <em>BNamericas</em> article, &ldquo;Geopolitical shifts, friendlier governments spark new Latin American investment cycle,&rdquo; which examines renewed investor interest in Latin America amid geopolitical shifts and the emergence of more market-friendly governments across the region. </p> <p>Carlos said the region &ldquo;may be at the beginning of a new cycle,&rdquo; as growing U.S.-China tensions redirect Western attention toward Latin America while political changes improve the environment for private investment. He highlighted infrastructure, mining, energy, and agribusiness as key areas attracting investment, pointing to opportunities in transportation and digital infrastructure, critical minerals, and energy projects. </p> <p>He also pointed to growing activity from U.S. infrastructure funds, saying, &ldquo;I haven't seen the US funds this active in the region for a long time.&rdquo; He added that Latin America&rsquo;s abundant land and low-cost renewable energy could create new opportunities for data center investment as development faces increasing constraints in the United States.</p> <p><a href="/-/media/files/perspectives/publications/2026/09/bnamericas---geopolitical-shifts-friendlier-governments-spark-new-latin-american-investment-cycle.pdf?rev=1912443d447046a6b23638c4087ec0c0&amp;hash=B241B0B25C249CC021F230A0CC9168A3">Read the full interview</a>.</p>{1A87A4AC-174F-4EF0-B3DE-DA47B31DB24B}https://www.arnoldporter.com/en/perspectives/news/2026/09/arnold-porter-advises-first-citizens-bank-in-acquisition-of-138-new-branchesArnold &amp; Porter recently served as outside co-counsel to First-Citizens Bank &amp; Trust Company, the bank subsidiary of First Citizens BancShares, Inc., in connection with its acquisition of select branch offices from BMO Bank N.A.Tue, 08 Sep 2026 00:00:00 -0500<p>Arnold &amp; Porter recently served as outside co-counsel to First-Citizens Bank &amp; Trust Company, the bank subsidiary of First Citizens BancShares, Inc., in connection with its acquisition of select branch offices from BMO Bank N.A. </p> <p>As part of the transaction, originally announced on October 16, 2025, and completed on September 4, 2026, First Citizens Bank has acquired 138 branches across 11 states, $5.0 billion in deposit liabilities, and $650 million in loans, enabling expansion into key new markets.</p> <p>Arnold &amp; Porter&rsquo;s role included handling matters involving the transfer of the deposits connected to the branch offices and the related portfolio of commercial and consumer loans, as well as handling all bank regulatory matters. The Arnold &amp; Porter team was led by partners Robert Azarow, David Freeman, and Amber Hay, and included partners Anthony Raglani and Rashmi Seth, senior counsel Christopher Allen, counsel Peter Danias, Stephanie Nygard, and Erik Walsh, senior associate Greg Criscitello, and associates Jacob Saracino and George Eichelberger.</p>{C8CC0FD7-06CD-4414-A351-803CFAAA715A}https://www.arnoldporter.com/en/perspectives/advisories/2026/09/occ-and-fdic-overhaul-bank-supervision-mras-and-enforcement-frameworkRobert C. Azarowhttps://www.arnoldporter.com/en/people/a/azarow-robert-crobert.azarow@arnoldporter.comBrendan M. Clegghttps://www.arnoldporter.com/en/people/c/clegg-brendan-mbrendan.clegg@arnoldporter.comChristopher DeCrescehttps://www.arnoldporter.com/en/people/d/decresce-christopherChris.DeCresce@arnoldporter.comDavid F. Freeman, Jr.https://www.arnoldporter.com/en/people/f/freeman-david-fDavid.Freeman@arnoldporter.comAmber A. Hayhttps://www.arnoldporter.com/en/people/h/hay-amber-aamber.hay@arnoldporter.comAnthony Raglanihttps://www.arnoldporter.com/en/people/r/raglani-anthonyanthony.raglani@arnoldporter.comKevin M. Toomeyhttps://www.arnoldporter.com/en/people/t/toomey-kevin-mkevin.toomey@arnoldporter.comRichard M. Alexanderhttps://www.arnoldporter.com/en/people/a/alexander-richard-mrichard.alexander@arnoldporter.comChristopher L. Allenhttps://www.arnoldporter.com/en/people/a/allen-christopher-lChristopher.Allen@arnoldporter.comErik Walshhttps://www.arnoldporter.com/en/people/w/walsh-erikerik.walsh@arnoldporter.comOn August 27, 2026, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) (together, the Agencies) issued a final rule (the Final Rule) adopting a regulatory definition for the term &ldquo;unsafe or unsound practice&rdquo; and revising the supervisory framework for issuing matters requiring attention (MRAs), as part of the Agencies&rsquo; more comprehensive efforts to focus supervisory and institution attention on material financial risks. On the same date, the OCC issued a notice of proposed rulemaking (the MRA Rule) to establish regulatory standards for the types of legal violations that can support an MRA. The OCC also issued a substantially revised edition of its policies and procedures manual governing bank enforcement actions (the Enforcement Manual), and made public its previously unreleased manual governing the use of MRAs (the MRA Manual).Tue, 08 Sep 2026 00:00:00 -0500<p>On August 27, 2026, the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) (together, the Agencies) issued a final rule (the <a rel="noopener noreferrer" href="https://occ.gov/news-issuances/news-releases/2026/nr-ia-2026-71a.pdf" target="_blank">Final Rule</a>) adopting a regulatory definition for the term &ldquo;unsafe or unsound practice&rdquo; and revising the supervisory framework for issuing matters requiring attention (MRAs), as part of the Agencies&rsquo; more comprehensive efforts to focus supervisory and institution attention on material financial risks. On the same date, the OCC issued a notice of proposed rulemaking (the <a rel="noopener noreferrer" href="https://occ.gov/news-issuances/news-releases/2026/nr-occ-2026-72a.pdf" target="_blank">MRA Rule</a>) to establish regulatory standards for the types of legal violations that can support an MRA. The OCC also issued a substantially revised edition of its policies and procedures manual governing bank enforcement actions (the <a rel="noopener noreferrer" href="https://occ.gov/news-issuances/news-releases/2026/ppm-5310-3.pdf" target="_blank">Enforcement Manual</a>), and made public its previously unreleased manual governing the use of MRAs (the <a rel="noopener noreferrer" href="https://occ.gov/news-issuances/news-releases/2026/ppm-5400-11.pdf" target="_blank">MRA Manual</a>).</p> <p>Together, these developments will significantly reform the process used by the Agencies &mdash; and in particular, the OCC &mdash; to consider, issue, communicate, validate, and terminate their most commonly used supervisory tools and enforcement mechanisms. </p> <h2>Final Rule</h2> <p>The Final Rule follows an October 2025 proposal[[N: Unsafe or Unsound Practices, Matters Requiring Attention, 90 Fed. Reg. 48,835 (Oct. 30, 2025).]] from the Agencies designed to codify into regulation a prioritization of material financial risks over concerns related to policies, process, documentation, and other nonfinancial risks. As reflected in the preamble to the Final Rule, the Agencies believe it is critical that their enforcement and supervision standards further that prioritization.</p> <p>The standards used to define an &ldquo;unsafe or unsound practice&rdquo; for purposes of Section 8 of the Federal Deposit Insurance Act, 12 U.S.C. &sect; 1818, and for issuing MRAs, track those that were first set out in last year&rsquo;s proposal (previously covered in our Advisory titled <a href="/en/perspectives/advisories/2025/10/occ-and-fdic-regulatory-framework-for-community-banks">OCC and FDIC Take Steps to Refocus Supervision and Tailor the Regulatory Framework for Community Banks</a>). After considering the public comments received, the Agencies concluded that their proposed standards struck an appropriate balance between proactive identification of material financial risks and according institutions&rsquo; boards of directors and management the flexibility to enact day-to-day decisions based upon their business judgment and risk tolerance. The Agencies also concluded that the proposed standards facilitated the communication of clear and transparent supervisory findings. Accordingly, the proposed standards were adopted in the Final Rule.</p> <p>However, the Agencies determined that the Final Rule will not apply to enforcement and supervisory actions taken against individuals, known as institution-affiliated parties (IAPs). The Agencies explained that the unsafe or unsound practice definition could result in enforcement actions against IAPs influenced by factors &ldquo;unrelated to the gravity of the misconduct,&rdquo; such as the asset size or staff size of the institution at the time of the misconduct. The Agencies noted a concern that these types of factors could impede or distort incentives regarding enforcement actions against IAPs.</p> <p>The Final Rule also emphasizes examiners&rsquo; tailoring the unsafe or unsound practice label and MRAs to risk factors specific to a given institution. Notably, the Agencies explained that their expectations for what they will consider to be material harm to an institution&rsquo;s financial condition will be tailored based on risks associated with its capital structure, complexity, activities, asset size, and other financial risk-related factors. As the risks associated with these factors increase, the threshold for materiality of the harm &mdash; triggering either the unsafe or unsound label or an MRA &mdash; decreases. At the same time, the Agencies&rsquo; assessment of the harm becomes more granular, down to specific business lines, products, or services, as necessary, and the requirements to remediate the concerns increase.</p> <p>The preamble to the Final Rule provides additional insight into how the Agencies will exercise their supervisory discretion in issuing MRAs that are based on actual violations of banking or banking-related laws or regulations (i.e., those &ldquo;inherently associated&rdquo; with the conduct of banking or financial operations). Specifically, the Agencies state that they will only issue MRAs for &ldquo;substantive violations,&rdquo; which fall into the following categories: (1) violations that demonstrate a pattern or are systemic; (2) violations that have a more than minimal adverse impact on a bank&rsquo;s financial condition, accuracy of its books and records, or its customers; (3) violations that require, or could be reasonably expected to require, more than minimal restitution to make recipients whole; and (4) violations that involve insider misconduct or self-dealing.&nbsp;</p> <p>The Agencies label those violations that fall outside the scope of a &ldquo;substantive violation&rdquo; to be &ldquo;other violations.&rdquo; Examiners will only be permitted to direct, generally, that an &ldquo;other&rdquo; violation be remediated, unless federal or state law requires that specific additional actions be completed. Violations of guidelines, such as the Interagency Guidelines Establishing Standards for Safety and Soundness,[[N: See, e.g., 12 C.F.R. Part 30, Appendix A.]] will no longer be considered a violation of law or regulation.</p> <p>The Final Rule also codifies the framework for utilizing &ldquo;supervisory observations,&rdquo; which are informal observations of weaknesses that fail to rise to the standard for issuing an MRA. This framework ensures that banks will not need to present supervisory observations to the board, or take any corrective action at all to address them. Examiners will not be permitted to formally track and document the implementation of changes made in response to a given supervisory observation.</p> <h2>MRA Rule</h2> <p>The OCC&rsquo;s MRA Rule is intended to supplement and formally codify the Final Rule preamble&rsquo;s differentiation between &ldquo;substantive&rdquo; and &ldquo;other&rdquo; (or &ldquo;technical&rdquo;) violations of law and regulation for purposes of determining when examiners can issue MRAs. As the OCC explains, the MRA Rule will eventually convert what essentially is a policy distinction found in the preamble to the Final Rule into a &ldquo;legally binding limit&rdquo; on the agency&rsquo;s ability to issue an MRA once the MRA Rule is finalized. The distinction between substantive and technical violations is intended to prioritize examiners&rsquo; and institutions&rsquo; attention on those violations that have a greater likelihood to impact banks and their customers.</p> <p>Under the MRA Rule, a violation can be deemed &ldquo;substantive&rdquo; if its &ldquo;nature, duration, frequency, or severity&rdquo; could &ldquo;meaningfully impact&rdquo; a bank or its customers, and the violation fits within the parameters of at least one of a set of specified categories. This assessment may be affected by the size of an institution and the scope of its operations.</p> <p>The categories the Agencies outlined in the preamble to the Final Rule generally track to the categories the OCC delineates in the MRA Rule. In the latter, the agency provides more detail about each category and illustrates a number of examples within the enumerated categories.</p> <ul> <li><strong>Systemic/Pattern of Violations</strong>: those violations that are widespread or prevalent in an institution or business line, repeated or ongoing, and are not isolated, e.g., a BSA compliance program violation or a pillar violation.</li> <li><strong>More Than Minimal Impact on Financial Condition</strong>: those violations that could &ldquo;reasonably&rdquo; be expected to have a direct, clear, predictable, and greater than de minimis financial impact on a bank, without considering any impact from the regulators&rsquo; response, e.g., the purchase of low-quality assets from an affiliate in violation of Section 23A of the Federal Reserve Act and Regulation W.</li> <li><strong>More Than Minimal Impact on Books and Records</strong>: those violations with more than a de minimis impact on the accuracy of an institution&rsquo;s books and records, e.g., a Call Report inaccuracy that would rise to the level of requiring an amendment under relevant call reporting guidance.</li> <li><strong>Violations Requiring Restitution</strong>: those violations having either a financial or nonfinancial impact on any of a bank&rsquo;s applicants, current customers, or former customers, and which could prompt either a large amount of restitution to a few customers or a small amount of restitution to many customers, e.g., a failure to establish an adequate identity theft program in violation of the Fair Credit Reporting Act and its implementing regulations.</li> <li><strong>Insider Violations</strong>: those violations that are knowing or for the benefit of an insider or an insider&rsquo;s associate, regardless of the size or prevalence of the violations, e.g., violations of Regulation O.</li> </ul> <p>Under the MRA Rule, the OCC would retain discretion to cite a technical violation instead of issuing an MRA, even if the violation meets the criteria of a substantive violation. Although OCC examiners will be allowed to tell banks to correct technical violations, they will not be permitted under the MRA Rule to specify individual corrective actions to be taken or to direct corrective actions be taken if those actions are unrelated to the cited violation. The OCC will not track the status of corrective actions for technical violations under the MRA Rule. Nonetheless, technical violations can be factored into ratings determinations.</p> <h2>Enforcement Manual</h2> <p>In making the first changes to the Enforcement Manual in three years, the <a rel="noopener noreferrer" href="https://www.occ.gov/news-issuances/news-releases/2026/ppm-5310-3.pdf" target="_blank">OCC significantly overhauled its existing procedures</a> to both align with the Final Rule and reveal a far more moderated posture towards the implementation and termination of enforcement actions. In the Enforcement Manual, the OCC elucidates its &ldquo;three guiding principles&rdquo; for enforcement actions: (1) escalation, providing banks an opportunity to remediate deficiencies before imposing, or issuing a more severe, action; (2) tailoring, both in terms of the type of action used, the speed in escalating actions, and requiring corrective actions; and (3) focus on those corrective actions that are essential to remediate specific deficiencies. The revised Enforcement Manual repeatedly stresses that examiners use &ldquo;objective facts and sound reasoning&rdquo; in every aspect of their enforcement action assessments, including when they consider initiating an action, debate the type of action to use, and contemplate proposed corrective actions. The revised Enforcement Manual sets out the factors it will consider when making escalation and tailoring decisions.</p> <p>Drawing in the terminology of the Final Rule and the MRA Rule, the Enforcement Manual illustrates the dividing line between informal, nonpublic actions and formal, public actions. For example, the OCC explains that failure to timely correct an MRA may appropriately lead to an informal action. The agency will generally seek to use a memorandum of understanding (MOU) as its preferred informal action, though MOUs are &ldquo;not appropriate&rdquo; if the bank has engaged in an unsafe or unsound practice or a substantive violation of law. The OCC may use individual minimum capital ratios (IMCRs) if the focus is on capital improvement, and the Enforcement Manual provides a list of situations that could prompt IMCRs. Conversely, a public cease-and-desist order (C&amp;D) is appropriate under the Enforcement Manual when a bank has engaged in an unsafe or unsound practice or substantive violation, or a violation of an agency order, agreement, or condition.</p> <p>The Enforcement Manual instructs examiners to take steps to increase the clarity and transparency of its required corrective actions and supervisory expectations that comprise the enforcement actions, including as related to the supporting facts, the legal basis, restrictions and limitations on activities, and the deadlines for corrective actions. Examiners will not be allowed to impose affirmative requirements lacking a tie to the deficiencies that prompted the action. Under the revised Enforcement Manual, bank boards and management retain the discretion and responsibility to determine the best way to achieve compliance with the required corrective actions.</p> <p>The Enforcement Manual sets out specific deadlines for examiners to present enforcement actions to banks, issue determinations of no supervisory objections for required submissions, and assess compliance with an action plan or with corrective action requirements.</p> <p>Examiners validating the corrective action taken by a bank will be required to &ldquo;substantially rely&rdquo; on work performed by that bank&rsquo;s internal audit function, so long as it has been rated satisfactory. OCC staff will have limited ability to seek additional information to independently confirm the effectiveness of the corrective action. In addition, supervisory communications regarding the current state of a bank&rsquo;s compliance with existing enforcement actions must be clear.</p> <p>Mirroring an earlier policy shift by the FDIC in 2025, the Enforcement Manual specifies that the OCC will terminate an enforcement action with a bank once it has achieved &ldquo;substantial compliance&rdquo; with the order, even if minor, isolated, or technical requirements have not been fully satisfied. The OCC can also terminate an existing enforcement action if examiners determine that action has become outdated or irrelevant to the current circumstances facing the bank. The Enforcement Manual implies that modifications or de-escalation of certain sections of existing actions could become more common if a bank has made significant improvements to its condition or certain requirements have already been successfully completed.</p> <p>Finally, the OCC removed former Appendix C from its manual; the Appendix, added during the Biden Administration, had established an escalation process for banks with &ldquo;persistent weaknesses.&rdquo;</p> <h2>MRA Manual</h2> <p>Alongside the revised Enforcement Manual, the OCC publicized the MRA Manual, which it issued earlier in 2026 but had kept strictly internal. The MRA Manual generally collects the various MRA-related policy statements and standards articulated in the Final Rule, MRA Rule, and Enforcement Manual into a single cohesive document. The MRA Manual also includes policy statements and standards applicable to the use of non-binding supervisory observations.</p> <p>The MRA Manual revisions reflect the OCC&rsquo;s focus on distinguishing financial-related weaknesses from other deficiencies, tailoring of corrective action to identified issues, providing transparency and clarity in supervisory communications, and deferring to boards and management in implementing specific corrective action. Under the MRA Manual, self-identification of violations and initiation of remediation will be important considerations for determining the extent of required corrective action. If the root cause of an issue is not apparent, examiners will be required to direct a bank to perform a root cause analysis as part of an MRA.</p> <p>The MRA Manual also sets out a specific standard for the OCC&rsquo;s use of lookback reviews. Under the MRA Manual, examiners can include a lookback as part of corrective action for an MRA only when: (1) the concern is reasonably expected to involve substantial harm to consumers; (2) the concern is reasonably expected to be systemic or demonstrate a pattern of violations; (3) there are concerns about widespread fraud or inaccuracies in a bank&rsquo;s books and records; or (4) other exceptional circumstances exist. The MRA Manual will require examiners to balance the burdens associated with a proposed lookback, including costs, with the benefits to be obtained through the review. A requirement to use an independent consultant to perform a lookback can only be included in an MRA when examiners do not have confidence in management&rsquo;s abilities, the bank has taken steps to conceal the concern, or other exceptional circumstances exist. Absent special circumstances, lookbacks related to suspicious activity and the use of SARs will be limited to one year or less.</p> <p>Finally, under the MRA Manual, examiners cannot delay closing out an MRA to assess sustainability of corrective action.</p> <h2>Takeaways</h2> <ul> <li>Examination teams and regional leadership at the Agencies will be responsible for complying with the new regulations and policies, so the impact of these collective policy changes swill take some time to filter through in practice. However, with the new standards in place, banks should expect the number of new MRAs issued by the OCC and FDIC to fall significantly. While examiners will continue to work through the exact contours of the new unsafe or unsound practice definition, the use of the term in routine supervisory correspondence and reports of examination should also drop dramatically. OCC- and FDIC-supervised institutions should review their supervisory records and consider whether any existing MRAs (1) fail to meet the new thresholds, (2) include corrective actions that do not relate to the identified deficiencies, and/or (3) have been held open longer than the agencies now suggest is appropriate, and consider petitioning the agency for modification or closure.</li> <li>At both Agencies, bank boards and management should have a better opportunity to seek a supervisory response in lieu of an enforcement action, and will likely find a more receptive audience for their advocacy. Self-identification and proactive remediation, combined with a more relaxed enforcement posture, should go a long way to staving off the enforcement process for many institutions.</li> <li>The collective issuances from both Agencies suggest that the supervisory and regulatory expectations for large and complex banks will be higher than for smaller community banks. Practices at community banks may fall below any of the newly announced thresholds, while triggering a supervisory or enforcement response for a bigger bank. Due to the tailoring approach adopted, the Agencies&rsquo; assessment of the impact of any practice will be more granular at a larger institution; what is considered &ldquo;material&rdquo; at a smaller bank and a larger bank will not be the same. The OCC in particular noted it would more quickly and more severely escalate through the enforcement process if a larger institution is involved.</li> <li>For supervisory decisions that fail to meet the new standards, banks should more seriously consider a challenge through the Agencies&rsquo; appeals processes. In addition to the reforms the Agencies have rolled out to those processes during the Trump administration, these issuances&rsquo; suggest part of the reason examiners should be clear, direct, and transparent in their supervisory correspondence is to inform banks&rsquo; decisions to appeal and assist agencies in administering those appeals.</li> <li>Banks should take advantage of the Agencies&rsquo; policy shifts to have frank discussions with their examination teams in advance of all supervisory decisions, written determinations, and approaching deadlines, as Agency leadership has pledged that their staffs will be more responsive and engaged with bank requests as to the scope and requirements of MRAs and enforcement actions.</li> <li>For those OCC-supervised institutions with existing formal or informal enforcement actions, boards and management should evaluate whether they can credibly assert that the corrective actions taken to date can collectively represent substantial compliance, and contend that termination of the action is warranted. At a minimum, a request to terminate could elucidate which of the outstanding requirements the OCC considers to be central to the enforcement action, and which the staff believes are merely isolated or technical, meaning they may not need to be completed before the action can be lifted.</li> </ul> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{0BF13220-BFEA-4FAC-B376-39768E588EE0}https://www.biosliceblog.com/2026/09/ag-kokott-recommends-annulment-of-urban-wastewater-directives-pharmaceutical-and-cosmetics-levy/Alexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comTom Foxhttps://www.arnoldporter.com/en/people/f/fox-tomTom.Fox@arnoldporter.comHeba Jalilhttps://www.arnoldporter.com/en/people/j/jalil-hebaheba.jalil@arnoldporter.comTue, 08 Sep 2026 00:00:00 -0500{1B60D901-28AA-49A5-AEA1-A645FADB15D6}https://www.arnoldporter.com/en/perspectives/advisories/2026/09/all-eyes-on-personalized-pricing-what-stakeholders-need-to-knowRaqiyyah Pippinshttps://www.arnoldporter.com/en/people/p/pippins-raqiyyahraqiyyah.pippins@arnoldporter.comWilliam Hallett Efronhttps://www.arnoldporter.com/en/people/e/efron-william-hallettwilliam.efron@arnoldporter.comDanait Mengisthttps://www.arnoldporter.com/en/people/m/mengist-danaitdanait.mengist@arnoldporter.comKayla Hill-Joneshttps://www.arnoldporter.com/en/people/h/hill-jones-kaylakayla.hill-jones@arnoldporter.comOn August 19, 2026, the Federal Trade Commission (FTC) announced it was seeking comments on a &ldquo;Proposed Enforcement Policy Statement Regarding Personalized Pricing.&rdquo; The proposed statement comes during a time of increasing concern by federal and state enforcers that modern data collection practices can allow businesses to use consumers&rsquo; personal data to set prices according to the amount they believe an individual consumer is willing to pay.Tue, 08 Sep 2026 00:00:00 -0500<p>On August 19, 2026, the Federal Trade Commission (FTC) announced it was seeking comments on a &ldquo;Proposed Enforcement Policy Statement Regarding Personalized Pricing.&rdquo;[[N: Fed. Trade Comm&rsquo;n, Proposed Enforcement Policy Statement Regarding Personalized Pricing (Aug. 19, 2026) (hereinafter Proposed Statement).]] The proposed statement comes during a time of increasing concern by federal and state enforcers that modern data collection practices can allow businesses to use consumers&rsquo; personal data to set prices according to the amount they believe an individual consumer is willing to pay.</p> <p>As noted in our <a href="/en/perspectives/advisories/2026/06/algorithmic-pricing-navigating-antitrust-and-consumer-protection-risks">prior Advisory</a>, &ldquo;personalized pricing&rdquo; (also referred to as &ldquo;surveillance pricing&rdquo;) has become an enforcement priority for many state legislatures and Attorneys General. Importantly, while, until recently, much of the state activity was centered on grocery retail and online food delivery industries, the FTC&rsquo;s statement is industry agnostic, instead centering on whether consumers reasonably expect that the prices they see &ldquo;will not be any different for them than they will be for their friends or neighbors.&rdquo;[[N: Proposed Statement, supra note 1.]] The FTC&rsquo;s proposed statement also arrives on the heels of New Jersey passing the first state law on personalized pricing that includes a private right of action. </p> <p>Dozens of surveillance pricing bills, and a parallel set addressing electronic shelf labels, are pending across roughly two dozen states, reinforcing the importance of companies anticipating the legal and regulatory risks that can be triggered by the use of personalized pricing in the United States. This Advisory summarizes the proposed statement, evaluates it against the backdrop of state personalized pricing laws, and closes with key takeaways for companies considering personalized pricing in the United States.</p> <h2>FTC&rsquo;s Proposed Enforcement Policy Statement</h2> <p>The FTC&rsquo;s draft statement acknowledges that &ldquo;Congress has not given the Commission the authority to prohibit personalized pricing in all circumstances.&rdquo; However, in the FTC&rsquo;s view, where consumers reasonably expect that prices will not vary based on their personal data, businesses engaged in personalized pricing would likely violate Section 5 of the FTC Act if they fail to clearly and conspicuously disclose when prices are personalized, the basis for the personalization, and the types of data used. The FTC presents its statement as an extension of the Trump administration&rsquo;s stated commitment to transparent pricing and affordability and expresses its intent &ldquo;to enforce the law aggressively against any deceptive or unfair personalized pricing practices that violate Section 5 of the FTC Act or any other law enforced by the Commission.&rdquo;[[N: Proposed Statement, supra note 1.]]</p> <p>According to the FTC, modern forms of data collection may enable companies to engage in personalized pricing in places that reasonable consumers would not expect, thereby causing consumer harm. As an example, the FTC asserts that consumers &ldquo;reasonably expect&rdquo; a product listing on a retailer website to be the same price that anyone else browsing to that listing would see, and that not knowing the pricing is personalized could impact &ldquo;consumers&rsquo; decisions regarding where to shop, whether and where to comparison shop, and other important considerations impacting the purchase process.&rdquo;</p> <p>The FTC also emphasizes that many Americans do not understand just how much data they generate, nor how the data may be used, &ldquo;including, potentially, to price products and services uniquely for them on the basis of their intimate details.&rdquo; Further, according to the proposed statement, &ldquo;the limited economic research&rdquo; on personalized pricing suggests &ldquo;the more sophisticated personalized pricing practices become, the less likely consumers are to benefit.&rdquo;</p> <p>These premises underpin the proposed approach to enforcement articulated in the draft statement.</p> <h3>Application of Section 5 of the FTC Act to Personalized Pricing</h3> <p>The FTC acknowledges that consumers do not expect prices to never vary and notes prices presented to individual consumers may vary because of supply and demand, geography, taxes, market conditions, risk-based underwriting, or the nature of certain products such as insurance and credit. The FTC&rsquo;s concern with varying prices arises when the personalized pricing is &ldquo;deceptive&rdquo; or &ldquo;unfair.&rdquo;</p> <p>Under Section 5 of the FTC Act, an act or practice is deceptive if it involves a representation, omission, or practice that is material and likely to mislead the consumer acting reasonably in the circumstances to the consumer&rsquo;s detriment.[[N: FTC Policy Statement on Deception, 103 F.T.C. 174 (1984) (appended to <em>In re Cliffdale Assocs., Inc.</em>, 103 F.T.C. 110 (1984)).]] An act or practice is unfair under Section 5 if it causes, or is likely to cause, substantial injury to consumers that is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or competition.[[N: FTC Policy Statement on Unfairness, 104 F.T.C. 949, 1070 (1984) (appended to <em>In re Int'l Harvester Co.</em>, 104 F.T.C. 949 (1984)).]] The FTC&rsquo;s statement explains that these principles apply with the same force to personalized pricing as to any other commercial conduct.</p> <p>The FTC frames personalized pricing as potentially deceptive where a business expressly or impliedly represents that a price is standard, static, broadly available, or based on ordinary commercial factors when, in fact, the price is personalized to the individual consumer. Examples include:</p> <ul> <li>Representing, expressly or by implication, that a price is static or widely offered when it is in fact personalized</li> <li>Failing to disclose personalization where the consumer reasonably believes the price is static or widely offered</li> <li>Misrepresenting the basis or effect of the personalization, for example, presenting a price derived from inferences about disposable income or shopping behavior at other firms as a loyalty discount based on purchase history[[N: Id. at 4-5.]]</li> </ul> <p>According to the FTC, the failure to disclose this information is material because consumers who are unaware of personalization cannot take steps to avoid a higher price, such as using a virtual private network or private browsing, switching to a retailer that does not personalize, or declining the transaction altogether.[[N: Id. at 5.]]</p> <p>Per the FTC, personalized pricing may be unfair when it causes a consumer to pay a higher price and the consumer cannot avoid the higher price because the fact or nature of the personalization has been concealed. Under this unfairness theory, the FTC explains that the higher price constitutes the substantial injury and the injury is not reasonably avoidable because the consumer lacks the practical tools to identify, dispute, correct, or avoid the data or inferences used to set the higher personalized price. The FTC declined to take a position on whether personalized pricing can be unfair when clearly and conspicuously disclosed.</p> <h3>Adequate Disclosures Under the Proposed Enforcement Policy Statement</h3> <p>In the FTC&rsquo;s view, when consumers reasonably expect that prices will not vary based on personal data, businesses that engage in personalized pricing without making adequate disclosures would likely violate Section 5. The proposed statement provides that, &ldquo;[t]o be effective, personalized pricing disclosures should be clear and conspicuous and include all relevant information, such as the fact that the price is personalized, the basis of that personalization, and the type of data used.&rdquo;[[N: Id. at 6.]] The statement further asserts that a vague statement that a consumer has received a &ldquo;specially selected&rdquo; price would likely be misleading if it omits material information about how the price was determined. Conversely, according to the FTC, a clear and conspicuous disclosure that &ldquo;a personalized price is based on a consumer&rsquo;s estimated willingness to pay derived from data about that consumer&rsquo;s previous purchases from the same retailer through the same login account&rdquo; would likely be adequate (if accurate and complete).[[N: Id. at 7.]] Such a disclosure, the FTC explains, would likely be enough to dispel any reasonable expectation that the posted price is not personalized and give the consumer the information needed to identify potentially incorrect information, take measures to avoid the personalized price, or avoid the future collection of data for personalized pricing.[[N: Id.]]</p> <h3>Representative Examples of Personalized Pricing Practices That May Violate the FTC Act</h3> <p>The statement offers a non-exhaustive list of scenarios in which personalized pricing without adequate disclosure would raise Section 5 concerns.[[N: Id. at 7-8. The examples are illustrative only. Id. at 5 n.18.]] The examples range well beyond the grocery and food delivery sectors that have dominated state activity and include:</p> <ul> <li>A food delivery company pricing higher based on data suggesting a consumer cannot leave home to buy food</li> <li>A grocery chain pricing milk higher based on data showing children live in the household</li> <li>A hotel pricing higher based on inferred funeral travel</li> <li>A rideshare company pricing higher for transport to a medical facility based on data suggesting an emergency or charging customers more based on the absence of competitor apps on their phones</li> <li>A retailer pricing a home-security system higher based on court filings showing recent crime victimization</li> <li>A retailer pricing higher on its website based on the consumer&rsquo;s in-store location while browsing</li> </ul> <p>A common thread among the FTC&rsquo;s examples is the use of sensitive or vulnerability-adjacent data that suggests that the consumer will pay a higher price than others, such as household composition, health, bereavement, crime victimization, physical location, or the absence of comparison-shopping options. </p> <h2>Parallel Developments at the State Level</h2> <p>The policy statement comes during a time where states are attempting to tackle personalized pricing on their own. Four states have already enacted laws directly addressing personalized pricing, with approaches spanning from disclosure requirements to outright prohibition. For example, as noted in our June 2026 Advisory on <a href="/en/perspectives/advisories/2026/06/algorithmic-pricing-navigating-antitrust-and-consumer-protection-risks">Algorithmic Pricing: Navigating Antitrust and Consumer Protection Risks</a>:</p> <ul> <li><strong>New York&rsquo;s</strong> Algorithmic Pricing Disclosure Act requires companies to disclose to consumers when their personal data is used to set a price, using a prescribed disclosure stating &ldquo;THIS PRICE WAS SET BY AN ALGORITHM USING YOUR PERSONAL DATA.&rdquo;[[N: N.Y. Gen. Bus. Law &sect; 349-a (Algorithmic Pricing Disclosure Act).]]</li> <li><strong>Maryland&rsquo;s</strong> Protection from Predatory Pricing Act, which applies only to large food retailers and third-party food delivery providers, bars use of personalized pricing by these companies out right, with a few exceptions.[[N: Protection from Predatory Pricing Act, H.B. 895, 2026 Gen. Assemb., Reg. Sess. (Md. 2026).]]</li> <li><strong>Connecticut&rsquo;s</strong> omnibus privacy law takes a hybrid approach, imposing a disclosure requirement on businesses that use consumers&rsquo; personal data to set prices (&ldquo;THIS PRICE WAS INCREASED BY A PRICE SETTING DEVICE USING YOUR PERSONAL DATA&rdquo;), while barring retail sellers and third-party food delivery services from surveillance pricing outright.[[N: An Act Concerning Consumer Privacy and Protection, Conn. Pub. Act No. 26-64 (S.B. 4) (2026).]]</li> </ul> <p>Each of these laws can only be enforced by the state attorney general.</p> <p>In July 2026, <strong>New Jersey</strong> became the first state to prohibit the use of personalized pricing, while including a private right of action. New Jersey&rsquo;s Fair Price Protection Act, signed on July 23, 2026, makes it an unlawful practice to use surveillance pricing for groceries and other foodstuffs (subject to a few exceptions including cost-based price differences and bona fide discounts). A violation of the Fair Price Protection Act is also deemed a violation of New Jersey&rsquo;s UDAP statute, the New Jersey Consumer Fraud Act, which enables consumers to enforce the statute directly, including on a class basis, for treble damages, attorneys&rsquo; fees, and costs. The Attorney General may separately recover actual damages or $50,000 per violation, whichever is greater. The Fair Price Protection Act also reaches pricing hardware, barring electronic shelf labels connected to surveillance pricing technology and imposing a one-year moratorium on new electronic shelf label deployments beginning February 1, 2027.[[N: <a rel="noopener noreferrer" href="https://pub.njleg.gov/Bills/2026/A4500/4085_U1.HTM" target="_blank">Fair Price Protection Act</a>, P.L. 2026, c. 65 (A4085/A4523) (N.J., signed July 23, 2026).]] The other enforcement provisions take effect on August 1, 2027.</p> <p>Other notable state bills under consideration include the following:</p> <ul> <li><strong>New York&rsquo;s</strong> One Fair Price Act (S.8623B/A.9349B), which passed both chambers in June 2026 and awaits signature by Governor Hochul. The bill would amend Section 349-a of the General Business Law to prohibit surveillance pricing outright, moving New York from disclosure to prohibition and reaching well beyond the grocery sector. Bona fide discounts, coupons, loyalty programs, and senior pricing that are uniformly available to consumers meeting the required eligibility would be preserved. The Attorney General would enforce the prohibition as an unfair and deceptive practice. If signed, the act would take effect 180 days later.[[N: One Fair Price Act, S. 8623-B / A. 9349-B, 2025-2026 Reg. Sess. (N.Y. 2026).]]</li> <li><strong>California&rsquo;s</strong> AB 2564, which would bar retailers who sell tangible personal property from setting a customized price for a good based on personally identifiable information collected through electronic surveillance. The bill passed the California Assembly in May 2026 and remains before the Senate, where it was further amended in August 2026; the scope of its carve-outs for discounts and loyalty programs has been a focus of that process.[[N: A.B. 2564, 2025-2026 Reg. Sess. (Cal. 2026).]]</li> <li><strong>Washington&rsquo;s</strong> companion bills HB 2481 and SB 6312, which would ban use of personalized pricing for groceries, restrict surge pricing on essential goods, and impose a four-year moratorium on electronic shelf labels, with violations enforceable under the state Consumer Protection Act.[[N: H.B. 2481 &amp; S.B. 6312, 2026 Reg. Sess. (Wash. 2026).]] Washington&rsquo;s Consumer Protection Act would be enforceable by the Attorney General, while also providing a private right of action under the state UDAP statute.</li> </ul> <p><strong>Illinois</strong>, with its HB 4248 and SB 2255, is among the other states considering outright bans, and by some counts, more than 40 personalized pricing bills are pending across two dozen states. However, not all advance: in June 2026, Colorado&rsquo;s governor vetoed HB 26-1210, a comparable bill that would have prohibited using data analytics to set individualized prices for consumers and individualized wages for employees.</p> <h2>Key Takeaways</h2> <p>To mitigate risk, companies that use, or are considering use of personal data as a pricing input may want to consider the following:</p> <p><strong>Continue to monitor and account for legal developments at the federal and state level</strong>: There are notable differences between the FTC&rsquo;s proposed enforcement policy statement and the approach taken by some states with respect to personalized pricing. As such, a compliance program calibrated to New York&rsquo;s or Connecticut&rsquo;s prescribed disclosure language, may not be adequate in the FTC&rsquo;s view. Conversely, the clear and conspicuous disclosures outlined by the FTC will not facilitate compliance with the Maryland, Connecticut, or New Jersey laws to the extent they bar personalized pricing for certain goods outright. These differences may become more pronounced if states pass broader bans. Accordingly, compliance and risk assessment in this area must account for an evolving (and at times inconsistent) enforcement and regulatory landscape at the federal and state level.</p> <p><strong>Inventory the pricing inputs</strong>. Identify whether any pricing model &mdash; in-house or vendor-supplied &mdash; uses individual-level data, including browsing patterns and purchase history, location, device information, household composition and income, or inferences from such data.</p> <p><strong>Audit disclosures against the FTC&rsquo;s proposed criteria</strong>. Confirm that disclosures convey the fact of personalization, its basis, and the categories of data involved, and that disclosures appear clearly and conspicuously where consumers see the affected prices rather than in linked terms.&nbsp;</p> <p><strong>Screen for sensitive inferences</strong>. Evaluate whether any pricing model uses sensitive or other individual level data as proxies for conditions that might make consumers more vulnerable to paying higher prices, including those identified in the FTC&rsquo;s statement: medical emergencies bereavement, household composition, crime victimization, and constrained shopping alternatives. Using such individual data in this manner to charge higher prices without adequate disclosures is more likely to draw enforcement scrutiny.</p> <p><strong>Confirm the consent chain</strong>. The FTC&rsquo;s statement also cautioned that businesses that collect, use, or disclose consumers&rsquo; personal data for the purpose of personalized pricing without adequate disclosures or without obtaining consent may violate Section 5. Accordingly companies should verify and document that data used for pricing, including data obtained from third parties, was collected with disclosure and consent covering that use.</p> <p><strong>Reassess how prices are presented</strong>. Representations that a price is a &ldquo;standard,&rdquo; &ldquo;everyday,&rdquo; or &ldquo;member&rdquo; price may create the static-price expectation the FTC treats as the predicate for a deception claim, and the proposal indicates that labeling a price &ldquo;special&rdquo; or &ldquo;selected&rdquo; without explaining how it was determined would likely be misleading.</p> <p><strong>Consider submitting comments</strong>. On September 3, 2026, the FTC extended the deadline for the submission of public comments on its personalized pricing statement until September 25. While the enforcement policy statement is not binding law, it does reflect how the FTC may interpret standards of deception and unfairness in the context of personalized pricing and how it may prioritize its enforcement resources in this area. Given the growing use of data-driven personalized pricing practices, companies in affected industries, including retail, grocery, food delivery, travel, and rideshare, as well as their pricing and data vendors, should consider submitting comments.&nbsp;</p> <p><strong>Treat pricing-data governance as litigation risk management</strong>. New Jersey&rsquo;s new law (which provides for a private right of action and deems violations to also be violations of its UDAP statute) coupled with the FTC&rsquo;s unfairness and deception theories as articulated in the proposed statement[[N: There is no private right of action under Section 5 of the FTC Act. However many states have UDAP laws (sometimes referred to as &ldquo;Little FTC Acts&rdquo;) that both provide a private damages remedy and look to interpretations of Section 5 either as a matter of statutory command or judicial interpretation. Accordingly, the risk of private actions in such states exists even in the absence of a specific ban on or regulation of personalized pricing.]] could be relied upon by the plaintiffs&rsquo; bar to challenge personalized pricing practices under other state UDAP statutes. Thus, it is prudent to contemplate nuisance demands and litigation when assessing the potential risks associated with implementing personalized pricing strategies.&nbsp;</p> <p>We will continue to monitor developments regarding the FTC&rsquo;s proposed enforcement policy statement and state activity in this area. Please contact any of the authors or your Arnold &amp; Porter contact with questions about how such developments may affect your pricing, data, or disclosure practices.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{56109DCC-49E8-4D83-ACCD-25B24BC8BE23}https://www.biosliceblog.com/2026/09/cjeu-ruling-clarifies-scope-of-medical-device-definition/Adela Williamshttps://www.arnoldporter.com/en/people/w/williams-adelaadela.williams@arnoldporter.comChristopher Bateshttps://www.arnoldporter.com/en/people/b/bates-christopherchristopher.bates@arnoldporter.comHeba Jalilhttps://www.arnoldporter.com/en/people/j/jalil-hebaheba.jalil@arnoldporter.comMon, 07 Sep 2026 00:00:00 -0500{0211938B-FCB7-43E2-A6F4-F3CF408B053E}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/09/tom-pettit-breaks-down-proposed-sba-size-standards-for-law360<p>Tom Pettit, a senior associate in the Government Contracts &amp; National Security practice, was quoted in the recent <em>Law360 </em>article, &ldquo;Proposed Small-Biz Standards Could Hurt Smaller Cos.,&rdquo; which examined how the U.S. Small Business Administration&rsquo;s newly proposed size standards could reshape competition among federal contractors.</p>Fri, 04 Sep 2026 00:00:00 -0500<p>Tom Pettit, a senior associate in the Government Contracts &amp; National Security practice, was quoted in the recent <em>Law360 </em>article, &ldquo;Proposed Small-Biz Standards Could Hurt Smaller Cos.,&rdquo; which examined how the U.S. Small Business Administration&rsquo;s newly proposed size standards could reshape competition among federal contractors.</p> <p>Tom explained that the proposed standards would expand the number of contracts reserved for small businesses under the &ldquo;rule of two,&rdquo; which requires agencies to set aside procurements whenever at least two small companies are expected to submit competitive offers. &ldquo;Within those procurements, there&rsquo;s going to be a lot more competition, which is probably a net positive from the government's perspective, but for existing small businesses, that would potentially be viewed as a negative,&rdquo; he said.</p> <p>Tom also touched on several other potential effects of the proposed rule, including increased M&amp;A transactions in the government contracting marketplace, the impact on the SBA&rsquo;s mentor-prot&eacute;g&eacute; program, and legal challenges under the Small Business Act and the Administrative Procedure Act.</p> <p><a href="https://www.law360.com/articles/2520430/proposed-small-biz-standards-could-hurt-smaller-cos-">Read the full article</a> (subscription required).</p>{9FB04B45-E55B-4869-A507-23B3D280821B}https://www.arnoldporter.com/en/perspectives/publications/2026/08/virtual-digital-health-digestAllison W. Shurenhttps://www.arnoldporter.com/en/people/s/shuren-allison-wallison.shuren@arnoldporter.comAlexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comFabien Royhttps://www.arnoldporter.com/en/people/r/roy-fabienfabien.roy@arnoldporter.comAbeba Habtemariamhttps://www.arnoldporter.com/en/people/h/habtemariam-abebaAbeba.Habtemariam@arnoldporter.comDr. Beatriz San Martinhttps://www.arnoldporter.com/en/people/s/san-martinbeatriz.sanmartin@arnoldporter.comNancy L. Perkinshttps://www.arnoldporter.com/en/people/p/perkins-nancy-lnancy.perkins@arnoldporter.comJames Castro-Edwardshttps://www.arnoldporter.com/en/people/c/castro-edwards-jamesjames.castro-edwards@arnoldporter.comCasey Brouhardhttps://www.arnoldporter.com/en/people/b/brouhard-caseycasey.brouhard@arnoldporter.comJacqueline L. Degannhttps://www.arnoldporter.com/en/people/d/degann-jacquelinejackie.degann@arnoldporter.comAna González-Lamuñohttps://www.arnoldporter.com/en/people/g/gonzalez-lamuno-anaana.lamuno@arnoldporter.comEmma Elliston, Ph.D.https://www.arnoldporter.com/en/people/e/elliston-emmaemma.elliston@arnoldporter.comHeba Jalilhttps://www.arnoldporter.com/en/people/j/jalil-hebaheba.jalil@arnoldporter.comShama Aktarhttps://www.arnoldporter.com/en/people/a/aktar-shamashama.aktar@arnoldporter.comBrianna Morigneyhttps://www.arnoldporter.com/en/people/m/morigney-briannabrianna.morigney@arnoldporter.comLily Caohttps://www.arnoldporter.com/en/people/c/cao-lilylily.cao@arnoldporter.comMickayla A. Stogsdillhttps://www.arnoldporter.com/en/people/s/stogsdill-mickaylamickayla.stogsdill@arnoldporter.comCaroline Oliverhttps://www.arnoldporter.com/en/people/o/oliver-carolinecaroline.oliver@arnoldporter.comThis digest covers key virtual and digital health regulatory and public policy developments during July and early August 2026 from the United States, United Kingdom, and European Union.Tue, 01 Sep 2026 00:00:00 -0500<p>This digest covers key virtual and digital health regulatory and public policy developments during July and early August 2026 from the United States, United Kingdom, and European Union.</p> <h2>In this issue, you will find the following:</h2> <h3>U.S. News</h3> <ul> <li><a href="#Health Care Fraud And Abuse Updates">Health Care Fraud and Abuse Updates</a></li> <li><a href="#Privacy and AI Updates">Privacy and Artificial Intelligence (AI) Updates</a></li> <li><a href="#Policy Updates">Policy Updates</a></li> <li><a href="#FDA Updates">FDA Updates</a></li> </ul> <h3>U.S. Featured Content </h3> <p>During July and August 2026, U.S. regulators and lawmakers sharpened their focus on how artificial intelligence (AI)-enabled tools intersect with health data privacy, medical device oversight, and consumer protection. The Federal Trade Commission (FTC) sued telehealth provider Hims &amp; Hers Health over deceptive subscription practices and undisclosed sharing of consumers&rsquo; health data with third-party ad platforms, while a separate $36.4 million False Claims Act settlement targeted unnecessary genetic testing kickback schemes, underscoring continued scrutiny of both privacy practices and billing integrity in digital health. On Capitol Hill, the Senate Committee on Health, Education, Labor and Pensions (HELP Committee) advanced legislation extending Health Insurance Portability and Accountability Act (HIPAA)-like protections to wellness data collected by non-HIPAA-covered digital health companies, and Senator Warner released a sweeping AI policy framework with bills addressing consumer-facing AI agents and pre-deployment safety testing. U.S. Government Accountability Office (GAO) and Congressional Research Service (CRS) reports added to the conversation, flagging open questions around wearable health technology accuracy and the growing patchwork of state liability frameworks for health AI. Meanwhile, the U.S. Food and Drug Administration&rsquo;s (FDA) Digital Health Center of Excellence opened public comment on a discussion paper proposing a risk-based, &ldquo;competency-based&rdquo; framework for evaluating generative AI-enabled medical devices across their premarket and post-market lifecycle. Together, these developments show U.S. regulators converging around the same core tension their EU and UK counterparts are navigating: building meaningful guardrails for health AI without stalling the pace of innovation.</p> <h3>EU and UK News</h3> <ul> <li><a href="#Regulatory Updates">Regulatory Updates</a></li> <li><a href="#Privacy Updates">Privacy Updates</a></li> <li><a href="#Product Liability Updates">Product Liability Updates</a></li> <li><a href="#IP Updates">IP Updates</a></li> </ul> <h3>EU/UK Featured Content </h3> <p>During July 2026, regulators in the EU and UK continued to focus on the practical implementation of AI and digital health regulation.</p> <p>In the EU, the Digital Omnibus on AI introduced the first substantive amendments to the AI Act, while policymakers and industry groups turned their attention to how AI requirements will interact with existing frameworks. This included new principles on the use of AI in Joint Clinical Assessment dossiers under the Health Technology Assessment Regulation, the European Federation of Pharmaceutical Industries and Association&rsquo;s (EFPIA) call for trusted AI testing environments and proportionate AI governance in its response to the Biotech Act consultation, and further debate on the treatment of software and AI-enabled technologies in the ongoing Medical Device Regulation (MDR)/In Vitro Diagnostic Regulation (IVDR) revision. Together, these developments reflect a growing focus on ensuring that AI-specific requirements integrate effectively with existing regulatory frameworks.</p> <p>In the UK, regulators published a series of guidance documents addressing questions about when AI-enabled products qualify as medical devices and how they should be regulated. New Medicines and Healthcare products Regulatory Agency (MHRA) guidance on ambient voice technologies and updated guidance on digital mental health technologies provide greater clarity on the medical device boundary, while additional outputs from the AI Airlock program highlight the challenges associated with qualification, intended purpose, and lifecycle management of AI systems. These developments suggest that regulators are increasingly focused on addressing practical implementation questions. </p> <h2>U.S. News</h2> <h3><a name="Health Care Fraud And Abuse Updates">Health Care Fraud And Abuse Updates</a></h3> <p><strong><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/texas-laboratory-former-ceo-and-florida-businessman-pay-total-364m-settle-allegations" target="_blank">Texas Laboratory, Former CEO, and Florida Businessman Pay a Total of $36.4 Million to Settle Allegations of Kickbacks and Unnecessary Genetic Testing</a></strong>. On July 30, 2026, Access DX Laboratory of Houston, Texas, its former CEO Michael Stewart, and Florida businessman Harold Shatz agreed to pay a combined $36.4 million to resolve False Claims Act allegations for medically unnecessary genetic testing. The government alleged that, from January 2018 through January 2020, the defendants paid kickbacks to marketers in exchange for patient referrals for genetic testing, unbundled billing codes, and paid telemedicine providers for false and fraudulent doctors&rsquo; orders, resulting in the submission of false claims to Medicare and Medicaid. As part of the settlement, Access DX entered into a five-year Corporate Integrity Agreement, and both Stewart and Shatz agreed to plead guilty to related criminal kickback conspiracy charges.&nbsp;</p> <h3><a name="Privacy and AI Updates">Privacy and AI Updates</a></h3> <p><strong>Online Telehealth Company Sued for Undisclosed Sharing of Consumers&rsquo; Health Information</strong>. On July 29, 2026, the FTC, attorneys for the People of California, and the Utah Division of Consumer Protection filed a federal court <a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/Hims-Complaint-Redacted-E-Filed.pdf" target="_blank">complaint</a> against online telehealth provider Hims &amp; Hers Health, Inc. (HHH) for alleged violations of the FTC Act, the Restore Online Shoppers&rsquo; Confidence Act, California&rsquo;s Unfair Competition Law and False Advertising Law, and the Utah Consumer Sales Practices Act. According to the complaint, HHH misled consumers into believing that submitting a medical intake form did not obligate them to subscribe to a provider&rsquo;s recommended treatment, when in fact HHH routinely charged and enrolled consumers in subscriptions almost immediately after intake, with no opportunity for the consumers to consent to the recommended treatment. In addition, HHH allegedly obscured the timing of recurring refill charges, making it difficult for consumers to cancel their subscriptions, and, while declaring that its platform was &ldquo;100% online, private, and secure&rdquo; and consumers&rsquo; sensitive health information would only be accessed by HHH medical providers, allegedly shared consumers&rsquo; personal health information with third-party advertising platforms through tracking tools such as the Meta Pixel. Plaintiffs seek a permanent injunction, monetary and civil penalties, and other relief.</p> <p><strong>Senate HELP Committee Approves Health Information Privacy Reform Act</strong>. On July 30, 2026, the Senate Health, Education, Labor and Pensions Committee unanimously <a rel="noopener noreferrer" href="https://www.help.senate.gov/rep/newsroom/press/chairman-cassidy-advances-legislation-supporting-children-with-dyslexia-expanding-opportunities-for-americans-to-succeed" target="_blank">voted</a> to approve S. 3097, the proposed Health Information Privacy Reform Act, which would impose standards comparable to HIPAA&rsquo;s privacy, security, and breach notification requirements on non-HIPAA-regulated entities. Such entities offering digital health technologies to generate &ldquo;wellness data&rdquo; about an individual (such as step counts, vital statistics, and records of drug administration) would have to provide the individual with advance notice that the data will not be protected by HIPAA, and an opportunity to opt out. The U.S. Department of Health and Human Services (HHS) would have authority, in consultation with the FTC, to enforce the law and to impose civil monetary penalties in the same manner as authorized under HIPAA for HIPAA-regulated entities. The bill next proceeds to the full Senate for consideration.</p> <h3><a name="Policy Updates">Policy Updates</a></h3> <p><strong>Senator Warner Releases AI Policy Framework and Legislation</strong>. On July 21, 2026, Sen. Mark Warner (D-VA) <a rel="noopener noreferrer" href="https://www.warner.senate.gov/wp-content/uploads/2026/07/FINAL-AI-Framework-Booklet.pdf" target="_blank">released</a> the &ldquo;Framework for America&rsquo;s AI Future&rdquo; &mdash; an AI policy framework accompanied by several legislative proposals. Among the most notable bills are the AI Artificial Intelligence Access, Gatekeeper Exchange, and Nondiscriminatory Transfer (AGENT) Act (<a rel="noopener noreferrer" href="https://www.congress.gov/bill/119th-congress/senate-bill/5051/text" target="_blank">S. 5051</a>), which would establish privacy, cybersecurity, and interoperability requirements for consumer-facing AI agents, and the Secure Artificial Intelligence Development Act (<a rel="noopener noreferrer" href="https://www.congress.gov/bill/119th-congress/senate-bill/5061/text" target="_blank">S. 5061</a>), which would require pre-deployment testing and create a voluntary safety incident reporting system for advanced AI models. Although the package addresses AI broadly, the proposals would have significant implications for digital health technologies, including AI-powered health assistants and chatbots that process sensitive health information.&nbsp;</p> <p><strong>GAO Examines Clinical Use of AI-Enabled Wearable Health Technologies</strong>. On August 6, 2026, the GAO released a technology assessment titled, <a rel="noopener noreferrer" href="https://www.gao.gov/products/gao-26-107847" target="_blank">Wearable Technologies: Potential Benefits and Challenges in Clinical Decision-Making</a> (GAO-26-107847). GAO found AI-augmented wearables that track individuals&rsquo; health data can support quicker diagnoses, more personalized care, and greater access to remote monitoring. The assessment found that wearable health devices &mdash; such as smart watches and continuous glucose monitors (CGMs) &mdash; can vary in accuracy and sometimes are difficult to integrate into clinical workflows. GAO offered several policy options for lawmakers, including consideration to better integrate wearables into clinical workflows and incentivizing device performance via a future public database of independently certified devices.&nbsp;</p> <p><strong>CRS Highlights State Legal Issues Surrounding Health AI</strong>. On August 10, 2026, the CRS published a &ldquo;Legal Sidebar&rdquo; titled, <a rel="noopener noreferrer" href="https://www.congress.gov/crs-product/LSB11467" target="_blank">Artificial Intelligence in Health: Overview of Selected State Liability Frameworks</a> (LSB11467), surveying state-by-state litigation over health-related AI technologies. Such lawsuits across the U.S. fall into two primary categories: health plans&rsquo; use of AI in coverage determinations and consumer-facing health AI apps. For Congress, CRS flags open questions on federal preemption, the limits of the FDA&rsquo;s jurisdiction with HIPAA, a patchwork of state AI-health laws, and pending bills including the Youth AI Privacy Act (<a rel="noopener noreferrer" href="https://www.congress.gov/bill/119th-congress/senate-bill/4199/text" target="_blank">S. 4199</a>) and the Senior Chatbot Protection Act of 2026 (<a rel="noopener noreferrer" href="https://www.congress.gov/bill/119th-congress/senate-bill/5117/text" target="_blank">S. 5117</a>).</p> <h3><a name="FDA Updates">FDA Updates</a></h3> <p><strong>FDA Seeks Public Feedback on Regulatory Approach for Generative AI-Enabled Medical Devices</strong>. On August 18, 2026, FDA&rsquo;s Digital Health Center of Excellence (DHCoE) within the Center for Devices and Radiological Health (CDRH) issued a discussion paper seeking stakeholder input on the regulation of generative artificial intelligence (GenAI)-enabled medical devices (Discussion Paper). Amongst other topics, the discussion paper covers considerations for the assessment of risk for GenAI-enabled medical devices, considerations for premarket evaluation of GenAI-enabled medical devices, and post-market monitoring for GenAI-enabled medical devices.</p> <p>CDRH describes a two-axis framework as a possible organizing heuristic for thinking about the risk of GenAI-enabled software functions. The framework places independence of device activity on one axis and consequences or severity of harm of relying on an incorrect device output on the other axis, implying a gradient of increasing risk. Consistent with prior FDA digital health guidance policies, the framework recognizes that the risk of a software function depends in part on how independently it directs or takes action (e.g., providing a non-directive risk score for a future cardiovascular event versus directing a patient to seek emergency care). The Discussion Paper notes that the distinction between &ldquo;non-directive&rdquo; and &ldquo;action-directing&rdquo; information may not be binary but rather would likely involve a continuum.</p> <p>For premarket review, CDRH is considering a &ldquo;competency-based&rdquo; evaluation approach that would combine non-clinical device benchmarking with clinical confirmation, with the level of evidence tailored to the device&rsquo;s intended use and risk. The competency-based model is inspired by how human clinicians are evaluated and credentialed, but would be adapted for the technical, practical, and legal considerations applicable to the regulation of medical devices. Benchmarking could evaluate clinical knowledge, analytic capabilities, safety behavior, communication, and generalizability. Clinical confirmation could range from retrospective testing and &ldquo;shadow deployment&rdquo; to clinician decisions or prospective clinical studies, depending on the device and its risk profile. CDRH is also considering whether qualified independent third parties could support benchmarking, maintain evaluation datasets, or serve as expert clinical adjudicators.</p> <p>The Discussion Paper also describes a variety of potential approaches to post-market oversight for monitoring Gen-AI-enabled devices, including periodic re-benchmarking, periodic sample-based clinician review, and performance degradation monitoring. CDRH also seeks input on considerations for post-market modifications of GenAI-enabled devices.</p> <p>The Discussion Paper is nonbinding, is not a draft or final guidance, and does not propose changes to FDA policy or establish evidentiary expectations for future marketing submissions.&nbsp;</p> <p>Comments are due by October 19, 2026, and should be submitted under docket number FDA-2026-N-7874 on <a rel="noopener noreferrer" href="https://www.regulations.gov/" target="_blank">Regulations.gov</a>.</p> <p> </p> <h2>EU and UK News</h2> <h3><a name="Regulatory Updates">Regulatory Updates</a></h3> <p><a rel="noopener noreferrer" href="https://ec.europa.eu/newsroom/sante/newsletter-archives/74172" target="_blank"></a><strong><a href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32026R1744" target="_blank">EU Adopts Digital Omnibus on AI to Simplify Implementation of the AI Act</a></strong>. The EU has adopted the Digital Omnibus on AI (Regulation (EU) 2026/1744), introducing targeted amendments to the AI Act aimed at reducing regulatory burden and improving alignment with sector-specific legislation. Key changes include clarifying the scope of high-risk AI systems and safety components, expanding AI regulatory sandbox provisions, strengthening the powers of the EU AI Office, and clarifying the interaction between the AI Act and other frameworks, including the <a rel="noopener noreferrer" href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32024R2847" target="_blank">Cyber Resilience Act</a>. The Digital Omnibus on AI entered into force on July 27, 2026, with staggered application dates for various amended EU AI Act provisions.</p> <p><strong><a rel="noopener noreferrer" href="https://www.europarl.europa.eu/doceo/document/SANT-PR-787987_EN.pdf" target="_blank">European Parliament Publishes Draft Report in Response to the European Commission&rsquo;s Proposal to Amend Regulation (EU) 2017/745 (MDR) and Regulation (EU) 2017/746 (IVDR)</a></strong>. The draft report shows broad support for the European Commission&rsquo;s reforms, while suggesting further targeted amendments. The European Parliament proposes additional measures to support access to &ldquo;niche&rdquo; medical technologies and to streamline classification and conformity assessment processes. For digital health companies, it includes further revisions to the proposed software classification rules and supports more structured pre-submission engagement with notified bodies, although it is not expected to significantly expand the circumstances in which software can qualify as a Class I device. Read our <a rel="noopener noreferrer" href="https://www.biosliceblog.com/2026/07/edpb-guidelines-on-anonymisation-what-life-sciences-companies-need-to-know/" target="_blank">July 2026 BioSlice Blog</a> for more details on the proposed amendments.</p> <p><strong><a rel="noopener noreferrer" href="https://www.efpia.eu/news-events/the-efpia-view/efpia-news/efpia-submission-to-the-eu-biotech-act-consultation/" target="_blank">EFPIA Publishes Response to the EU Biotech Act Consultation</a></strong>. Following its position paper last month (see our <a href="https://www.arnoldporter.com/en/perspectives/publications/2026/07/virtual-digital-health-digest" target="_self">July 2026 Digest</a>), EFPIA has now published its response to the European Commission&rsquo;s consultation on the proposed EU Biotech Act. The submission condenses and reinforces its key recommendations, which include measures to support data- and AI-driven innovation. In particular, EFPIA supports clarification of the processing and reuse of clinical trial data, greater harmonization of GDPR requirements, the introduction of regulatory sandboxes, and the development of trusted AI testing environments. The submission also emphasizes that AI and data governance should be proportionate, risk-based, and aligned with existing legislation, while avoiding unnecessary duplication.</p> <p><strong><a rel="noopener noreferrer" href="https://www.team-nb.org/ivdr-proposal-for-risk-adaptive-surveillance-system/" target="_blank">Team-NB Proposal for Risk Adaptive Surveillance System</a></strong>. Team-NB has published a position paper setting out a proposal for revisions to the EU IVDR to establish a risk-adaptive surveillance system for In Vitro Diagnostics (IVDs), which would include software- and AI-based IVDs. Under the proposal, manufacturers would initially be subject to enhanced surveillance following certification, with the possibility of reduced oversight over time where they demonstrate sustained compliance, effective quality management systems, and strong post-market performance. The proposal is intended to support the European Commission&rsquo;s ongoing work to move away from fixed certificate validity periods and towards a system of periodic reviews, with the intensity of notified body oversight determined by the risk profile and compliance history of the device and manufacturer.</p> <p><strong><a rel="noopener noreferrer" href="https://environment.ec.europa.eu/publications/delegated-regulation-removability-and-replaceability-portable-batteries_en" target="_blank">European Commission Adds New Exemptions to Portable Battery Removal Requirements</a></strong>. The European Commission has adopted a delegated act adding six new product categories to the list of exemptions from the Batteries Regulation requirement that portable batteries be removable and replaceable by consumers. The new exemptions include certain wearable devices (such as smartwatches and fitness trackers), meaning that batteries in those products may instead be removable and replaceable by independent professionals. The European Commission has updated its <a rel="noopener noreferrer" href="https://environment.ec.europa.eu/publications/guidelines-facilitate-harmonised-application-provisions-removability-and-replaceability-portable-and_en" target="_blank">guidance</a> on battery removability and replaceability to assist manufacturers in applying the new derogations. The delegated act will now be scrutinized by the European Parliament before it can enter into force.</p> <p><strong><a rel="noopener noreferrer" href="https://health.ec.europa.eu/document/download/f34c1afd-8d01-44cc-bf94-33e4bcac0ef2_en?filename=mdcg_2026-5_en.pdf" target="_blank">MDCG Publishes Position Paper on UDI Assignment Between Manufacturers and Distributors</a></strong>. The Medical Device Coordination Group (MDCG) has published a position paper clarifying responsibility for assignment of Unique Device Identifiers (UDI-DIs) under the MDR and IVDR. The document addresses instances where distributors have assigned their own UDI-DIs to products marketed under their brand name, creating uncertainty about how devices should be identified and registered in EUDAMED. The position paper notes that responsibility for UDI assignment and registration remains with the manufacturer. While devices marketed under different brand names may have different UDI-DIs, those identifiers should remain linked to the manufacturer in EUDAMED.</p> <p><strong><a rel="noopener noreferrer" href="https://health.ec.europa.eu/latest-updates/general-principles-use-artificial-intelligence-preparation-jca-dossier-2026-07-16_en" target="_blank">HTA Coordination Group Publishes Principles on AI Use in Joint Clinical Assessment Dossiers</a></strong>. The European Commission has published new General Principles on the use of AI in the preparation of the Joint Clinical Assessment dossier under the EU Health Technology Assessment Regulation. The principles acknowledge that AI may be used in evidence synthesis and dossier preparation, but make clear that its use does not alter the legal, methodological or evidential requirements applicable to Joint Clinical Assessment (JCA) submissions.</p> <p><strong><a rel="noopener noreferrer" href="https://assets.publishing.service.gov.uk/media/6a4e7f23f79c9db2eb438f6b/DBT_Life_Sciences_Sector_Plan_Update_DIGITAL_2.pdf" target="_blank">UK Government Reports on Progress of Life Sciences Sector Plan</a></strong>. The government has published a progress report on the delivery of the Life Sciences Sector Plan, launched in July 2025 (see our <a rel="noopener noreferrer" href="https://www.biosliceblog.com/2025/07/the-uk-government-has-plans-what-does-this-mean-for-the-life-sciences-sector/" target="_blank">July 2025 BioSlice Blog </a>on the plan&rsquo;s publication). The update reports progress on four headline targets: (1) increasing investment in commercial research and development; (2) improving access to &ldquo;scale-up&rdquo; capital; (3) accelerating patient access to medicines and medicinal tech; and (4) increasing foreign direct investment. The report highlights the government&rsquo;s efforts to accelerate the adoption of digital health and medtech innovation through the National HealthTech Access Programme, value-based procurement reforms, and streamlined NHS adoption pathways. It also emphasizes investment in digital health infrastructure, including the new Health Data Research Service and regulatory initiatives such as the MHRA&rsquo;s AI Airlock program. Together, these measures are intended to support faster patient access to innovative technologies and strengthen the UK&rsquo;s position as a leading location for health technology innovation.&nbsp;</p> <p><strong><a rel="noopener noreferrer" href="https://www.gov.uk/government/publications/ambient-voice-technology-enabled-products/ambient-voice-technology-enabled-products" target="_blank">MHRA Publishes Guidance on Ambient Voice Technology-Enabled Products</a></strong>. The MHRA has published new guidance on ambient voice technology (AVT)-enabled products. AVTs are AI-powered tools that automatically capture and convert spoken words into text and/or other outputs. Increasingly, AVTs are GenAI-based, with powerful, general-purpose Large Language Models underlying. The guidance provides practical examples of when an AVT-enabled product will not qualify as a medical device, including: (1) ambient scribes intended to provide a transcript or summary of a clinical conversation between a clinician and a patient; (2) AVT products that format information from an encounter for a clinician to review, edit, and confirm; and (3) AVT products that suggest possible clinical codes for clinician review based on a clinical conversation. The guidance also provides examples of AVT products that will qualify as medical devices, such as AVT products that can provide &ldquo;generated insights&rdquo; that suggest diagnoses or treatment options. There is also guidance on the risk classification of AVT products that qualify as a medical device.&nbsp;</p> <p><strong><a rel="noopener noreferrer" href="https://assets.publishing.service.gov.uk/media/6a68c3490825cc51a6c37c1d/Digital_mental_health_technology_device_characterisation__regulatory_qualification_and_classification.pdf" target="_blank">MHRA Updates Guidance on Digital Mental Health Technologies</a></strong>. The MHRA has updated its guidance on the qualification and classification of digital mental health technologies (DMHT), which is intended to help manufacturers determine whether their products qualify as software as a medical device (SaMD). The revisions include additional information on the circumstances in which a technology would not be a medical device. For example, the guidance explains that some digital technologies will be made up of various software modules where some qualify as SaMD and others do not. Manufacturers can choose to regulate the DMHT modules that qualify as SaMD as separate products or all the modules as one product. The guidance has also been updated for consistency with the new guidance on AVTs discussed above.&nbsp;</p> <p><strong><a rel="noopener noreferrer" href="https://www.gov.uk/guidance/register-medical-devices-to-place-on-the-market" target="_blank">MHRA Updates Guidance on Registration of Medical Devices</a></strong>. The MHRA has updated its guidance on registering medical devices placed on the market or put into service in Great Britain. The guidance clarifies the MHRA&rsquo;s expectations with regard to registration of devices that are &ldquo;put into service&rdquo; but not &ldquo;placed on the market,&rdquo; in that MHRA registration is encouraged for such devices, though this is not legally required. New guidance also provides practical examples of when a device should be considered to be &ldquo;put into service.&rdquo;&nbsp;</p> <p><strong><a rel="noopener noreferrer" href="https://post.parliament.uk/approved-work-ai-models-in-drug-discovery-how-ai-models-used-to-design-and-develop-new-molecules-and-treatments-are-evaluated-and-regulated-in-the-uk/" target="_blank">UK Parliament Launches Work on Regulation of AI in Drug Discovery</a></strong>. The Parliamentary Office of Science and Technology (POST) has announced a new project examining how AI models used in drug discovery are evaluated and regulated in the UK. The work will explore the growing use of AI to design novel molecules, predict drug behavior before clinical testing, and support decisions on which drug candidates progress into development, alongside questions about validation, bias, reliability, and regulatory oversight. POST notes that the global AI drug discovery market is estimated at approximately $1.7 billion in 2024 and could exceed $8 billion by 2030. Stakeholders have been invited to contribute evidence until September 18, 2026, with publication of the final outcome expected in December 2026.</p> <p><strong><a rel="noopener noreferrer" href="https://assets.publishing.service.gov.uk/media/6a59e205908b618a53702f8b/Phase_2-_Candidate_Case_Studies_for_publication.pdf" target="_blank">MHRA Publishes Case Studies From AI Airlock Sandbox Phase 2</a></strong>. The MHRA has published case reports from Phase 2 of its AI Airlock Sandbox, providing practical insights into regulatory challenges faced by developers of AI as a medical device. The case studies informed the recommendations set out in the AI Airlock Sandbox Phase 2 program report (as reported in our <a href="/en/perspectives/publications/2026/07/virtual-digital-health-digest">July 2026 Digest</a>) and cover a range of topics, including intended purpose and validation, AI-powered in vitro diagnostic devices, regulatory intelligence, post-market surveillance, and the management of software changes. MHRA has also updated Recommendation 20 of the <a rel="noopener noreferrer" href="https://assets.publishing.service.gov.uk/media/6a676af523e57bd0a0ea6852/AI_Airlock_Phase_2_Programme_Report_v2.pdf" target="_blank">report</a> aimed at manufacturers of AI as a medical device. It states that qualification as a medical device cannot effectively rely on wording choices or disclaimers alone and product function and purpose should be demonstrated through example outputs and user journeys. Where products sit near the qualification boundary, manufacturers are encouraged to engage with the MHRA prior to deployment.</p> <h3><a name="Privacy Updates">Privacy Updates</a></h3> <p><a rel="noopener noreferrer" href="https://www.edpb.europa.eu/system/files/2026-04/edpb_guidelines_202601_scientificresearch_en.pdf" target="_blank"></a><strong><a href="https://www.edpb.europa.eu/system/files/2026-07/edpb_guidelines_2020603_webscraping_v1_en_0.pdf" target="_blank">EDPB Adopts Guidance on AI Web Scraping Anonymization and Blockchain</a></strong>. On July 7, 2026, the European Data Protection Board (EDPB) adopted draft guidelines on <a rel="noopener noreferrer" href="https://www.edpb.europa.eu/system/files/2026-07/edpb_guidelines_2020603_webscraping_v1_en_0.pdf" target="_blank">web scraping</a> for generative AI training (legal basis for scraping; conditions for processing special category data) and on <a rel="noopener noreferrer" href="https://www.edpb.europa.eu/system/files/2026-07/edpb_guidelines_202602_anonymisation_v1_en_0.pdf" target="_blank">anonymization</a> (a practical framework for assessing when data is successfully anonymized). Both guidelines are open for public consultation until October 30, 2026, and further details about the anonymization guidelines can be read in our <a rel="noopener noreferrer" href="https://www.biosliceblog.com/2026/07/edpb-guidelines-on-anonymisation-what-life-sciences-companies-need-to-know/#more-4050" target="_blank">July 2026 BioSlice Blog</a>. The EDPB also finalized its guidelines on <a rel="noopener noreferrer" href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.edpb.europa.eu%2Fsystem%2Ffiles%2F2026-07%2Fedpb_guidelines_202502_blockchain_v2_en.pdf&amp;data=05%7C02%7CTheresa.Denson%40arnoldporter.com%7C8ee8e028b1874d27383908df0867c43a%7Cd22d141fae37447facfa2e1d0e5b4969%7C0%7C0%7C639238913926892638%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&amp;sdata=vDKPG0FDjOkA%2BdsJ%2B2VdIBHYa9ieto1E7WKD%2BeRQAuc%3D&amp;reserved=0" target="_blank">blockchain processing</a> following consultation.</p> <p><strong><a rel="noopener noreferrer" href="https://www.gov.uk/government/calls-for-evidence/data-regulation-in-the-age-of-ai-and-other-data-intensive-technologies/data-regulation-in-the-age-of-ai-and-other-data-intensive-technologies" target="_blank">UK Government Opens Calls for Evidence on Data/AI Regulation and International Transfers</a></strong>. On July 15, 2026, the UK government launched a call for evidence on how personal and non-personal data regulation interacts with AI and other data-intensive technologies, and whether further guidance, targeted changes, or more fundamental reform is needed. A <a rel="noopener noreferrer" href="https://www.gov.uk/government/calls-for-evidence/data-flows-you-can-trust/data-flows-you-can-trust" target="_blank">parallel call for evidence</a> sought views on whether the UK&rsquo;s international data transfer regime is enabling trusted data flows. Both close on September 9, 2026.</p> <p><strong><a rel="noopener noreferrer" href="https://ico.org.uk/corporatestrategy" target="_blank">ICO Publishes Draft Corporate Strategy</a></strong>. On July 10, 2026, the Information Commissioner&rsquo;s Office (ICO) published its draft corporate strategy for 2026-2028, intended to bridge its current model to the future Information Commission governance structure (transition expected in autumn 2026). Four priorities are confirmed: protecting children, promoting trust and transparency in AI, improving public sector use of personal data, and building cyber resilience. The ICO aims to set clear expectations for the responsible use of personal data in AI, to reduce regulatory uncertainty and to alleviate concerns about safety, fairness, bias, and transparency in order to realize the full benefits of AI in society.&nbsp;</p> <h3><a name="Product Liability Updates">Product Liability Updates</a></h3> <p><strong><a rel="noopener noreferrer" href="https://lawtechuk.io/ukjt/liability-for-ai-harms-under-the-private-law-of-england-and-wales/" target="_blank">UK Jurisdiction Taskforce Publishes Final Legal Statement on Liability for AI Harms</a></strong>. Following a public consultation, the UK Jurisdiction Taskforce has published its final legal statement on liability for AI harms under the private law of England and Wales. The statement concludes that existing English law is generally capable of addressing harms caused by AI without the need for AI-specific legislation. It identifies contract and the common law of negligence as the principal mechanisms through which liability may arise, and considers how established doctrines such as professional liability, vicarious liability, non-delegable duties, product liability, and causation apply in an AI context. The statement also addresses liability for AI-generated statements, including chatbot outputs, and confirms that outcomes will depend on established legal principles applied to the particular facts of each case.&nbsp;</p> <h3><a name="IP Updates">IP Updates</a></h3> <p><strong>UKIPO Clarifies Patent Examination Practice for AI Inventions Following <em>Emotional Perception</em></strong>. On July 14, 2026, the UK Intellectual Property Office (UKIPO) published a <a rel="noopener noreferrer" href="https://www.gov.uk/government/publications/search-and-examination-of-uk-patent-applications-under-the-patents-act-1977-as-amended/search-and-examination-of-uk-patent-applications-under-the-patents-act-1977-as-amended" target="_blank">practice note</a> on the search and examination of UK patent applications following the Supreme Court of the United Kingdom&rsquo;s decision in <em>Emotional Perception AI Limited v. Comptroller General of Patents, Designs and Trade Marks</em> [2026] UKSC 3, covered in our <a href="/en/perspectives/publications/2026/03/virtual-and-digital-health-digest-march-2026">March</a>&nbsp;and <a href="/en/perspectives/publications/2026/04/virtual-digital-health-digest">May</a>&nbsp;2026 Digests. The practice note provides practical direction on how patent examiners should assess computer-implemented inventions, including inventions involving AI and artificial neural networks (ANNs). The practice notice confirms that the long-standing <em>Aerotel</em> approach should no longer be followed and reflects the Supreme Court&rsquo;s move towards closer alignment with the European Patent Office. In particular, examiners must first determine whether a claimed invention satisfies the patent-eligibility threshold by applying an &ldquo;any hardware&rdquo; test. They must then identify, on a feature-by-feature basis, which aspects of the claimed invention contribute to its technical character before assessing novelty and inventive step. Only those features which contribute to the technical character of the invention may be taken into account for the purposes of inventive step. The practice note is particularly relevant for applicants seeking patent protection for AI-enabled technologies. While the Supreme Court confirmed that ANNs may constitute computer programs for the purposes of the Patents Act 1977, the UKIPO has made clear that the central question will often be whether the claimed invention makes a technical contribution capable of supporting patentability. The practice note, therefore, provides greater clarity on how AI-related patent applications will be examined in the UK, although its practical impact will depend on how the revised framework is applied during examination.</p> <p><em>*Jack Chisem contributed to this Newsletter. Jack is employed as a paralegal in Arnold &amp; Porter&rsquo;s London office.</em></p> <p><span style="font-size: small;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{D8D69719-AB3F-4B70-A86C-578F628E46C3}https://www.arnoldporter.com/en/perspectives/advisories/2026/09/fda-seeks-public-feedback-on-regulatory-approach-for-generative-ai-enabled-medical-devicesMahnu V. Davarhttps://www.arnoldporter.com/en/people/d/davar-mahnu-vmahnu.davar@arnoldporter.comPhilip R. Desjardinshttps://www.arnoldporter.com/en/people/d/desjardins-philip-rphilip.desjardins@arnoldporter.comAbeba Habtemariamhttps://www.arnoldporter.com/en/people/h/habtemariam-abebaAbeba.Habtemariam@arnoldporter.comClaire W. Dennishttps://www.arnoldporter.com/en/people/d/dennis-claireclaire.dennis@arnoldporter.comLily Caohttps://www.arnoldporter.com/en/people/c/cao-lilylily.cao@arnoldporter.comOn August 18, 2026, the U.S. Food and Drug Administration&rsquo;s Digital Health Center of Excellence within the Center for Devices and Radiological Health issued a discussion paper seeking stakeholder input on regulation of generative artificial intelligence-enabled medical devices.Tue, 01 Sep 2026 00:00:00 -0500<p>On August 18, 2026, the U.S. Food and Drug Administration&rsquo;s (FDA) Digital Health Center of Excellence (DHCoE) within the Center for Devices and Radiological Health (CDRH) issued a <a rel="noopener noreferrer" href="https://www.fda.gov/news-events/press-announcements/fda-seeks-public-feedback-inform-regulatory-approach-generative-ai-enabled-medical-devices" target="_blank">discussion paper</a> seeking stakeholder input on regulation of generative artificial intelligence (GenAI)-enabled medical devices (Discussion Paper). Among other topics, the Discussion Paper addresses considerations for assessing risk, premarket evaluation, postmarket monitoring, and other issues relevant to the regulation of GenAI-enabled medical devices. CDRH notes that GenAI-enabled devices may present regulatory challenges distinct from traditional software and other artificial intelligence (AI)-enabled devices because they can accept open-ended inputs, produce variable outputs, perform multiple subtasks, and evolve over time through changes to models, prompts, retrieval strategies, guardrails, and other components.</p> <p>The paper is premised on the understanding that characteristics specific to GenAI-enabled devices raise unique questions regarding validation, intended-use boundaries, and postmarket oversight. While FDA has issued numerous policies relating to software, artificial intelligence, and machine learning, this document represents a comprehensive effort to evaluate whether existing regulatory approaches are sufficient for generative AI-enabled medical devices. As a result, the feedback received through this process is likely to help shape future FDA expectations regarding evidence generation, postmarket oversight, and management of GenAI-enabled product changes.</p> <p>CDRH describes a two-axis framework when considering the risk of GenAI-enabled software functions. The framework places independence of device activity on one axis and the consequences, or severity of harm, associated with relying on an incorrect device output on the other axis, implying a gradient of increasing risk. Consistent with prior FDA digital health policies, the framework recognizes that the risk of a software function depends in part on how independently it directs or takes action (e.g., providing a non-directive risk score for a future cardiovascular event versus directing a patient to seek emergency care). The Discussion Paper notes that the distinction between &ldquo;non-directive&rdquo; and &ldquo;action-directing&rdquo; information may not be binary, but instead may exist along a continuum.</p> <p>The Discussion Paper also identifies several factors that could affect the risk profile of a GenAI-enabled function. For instance, CDRH is considering whether patient-facing functions may present different or greater risks than functions used by health care professionals because patients may be less able to independently assess the reliability of an output. CDRH also raises questions regarding functions used by generalists rather than specialist clinicians, multi-turn conversational systems that may become increasingly directive over the course of an interaction, and care-escalation tools for which both under-escalation and over-escalation may create safety concerns.</p> <p>For premarket review, CDRH is considering a &ldquo;competency-based&rdquo; evaluation approach that would combine non-clinical device benchmarking with clinical confirmation, with the level of evidence tailored to the device&rsquo;s intended use and risk. The competency-based model is inspired by how human clinicians are evaluated and credentialed, but would be adapted for the technical, practical, and legal considerations applicable to medical device regulation. Benchmarking could evaluate clinical knowledge, analytic capabilities, safety behavior, communication, generalizability, and, for agentic systems, the ability to safely plan and execute multi-step tasks.</p> <p>Clinical confirmation could range from retrospective evaluation using real patient inputs and &ldquo;shadow deployment,&rdquo; in which the device operates in a live workflow without affecting patient care, to clinician adjudication or prospective clinical studies, depending on the device and its risk profile. CDRH emphasizes that a prospective clinical study may not be necessary in every case and is seeking input on how sponsors should select and justify an appropriate clinical confirmation approach. CDRH is also considering whether qualified independent third parties could support benchmarking, maintain evaluation datasets, conduct portions of a competency assessment, or serve as expert clinical adjudicators.</p> <p>A notable theme of the Discussion Paper is FDA&rsquo;s apparent willingness to consider a balancing of premarket and postmarket assurance for certain GenAI-enabled devices. Recognizing that open-ended and adaptive systems may be difficult to comprehensively evaluate before marketing, FDA asks whether greater uncertainty could be tolerated at the time of authorization if accompanied by robust postmarket monitoring, re-evaluation, and change-control mechanisms. The Discussion Paper describes a variety of potential approaches to postmarket oversight, including periodic re-benchmarking, periodic sample-based clinician review, and monitoring for performance degradation or drift. Notably, CDRH asks whether, in some circumstances, it may be appropriate to accept greater uncertainty regarding a GenAI-enabled device&rsquo;s benefit-risk profile at the premarket stage in exchange for more robust postmarket monitoring. CDRH also seeks input on how postmarket monitoring responsibilities should be allocated among manufacturers and other stakeholders, including clinicians, health care institutions, professional societies, standards-setting bodies, and other participants in the broader health care ecosystem. Although FDA has previously employed lifecycle-oriented oversight approaches for software and AI-enabled products, the Discussion Paper suggests that such tools may play an especially important role for GenAI-enabled devices whose performance may evolve over time or depend on rapidly changing third-party foundation models.</p> <p>Postmarket change control is another significant focus. CDRH notes that GenAI-enabled devices may change through sponsor-initiated software updates or retraining, through ongoing model evolution, or because of updates made by a third-party foundation model developer. The agency is considering approaches ranging from documentation within a manufacturer&rsquo;s quality management system to FDA authorization before implementation, and identifies Predetermined Change Control Plans (PCCPs) as one potential mechanism for managing certain anticipated changes without a new premarket submission. CDRH also seeks comment on how manufacturers should detect and evaluate changes to third-party foundation models that may affect device safety or effectiveness.</p> <p>Finally, CDRH seeks input on whether a voluntary &ldquo;Foundation Model Device Master File&rdquo; framework could facilitate review of devices built on third-party foundation models. Under the concept described in the Discussion Paper, foundation model developers or platform providers could submit confidential information regarding a model to FDA for reference by device sponsors in individual marketing submissions. CDRH also separately requests feedback on agentic AI systems, including whether autonomous multi-step action, external tool use, and reduced opportunities for human review warrant additional evaluation or oversight considerations.</p> <p>The concepts discussed have some overlap with FDA&rsquo;s existing approach to clinical decision support (CDS) software. As discussed in our<a href="/en/perspectives/advisories/2026/01/fda-cuts-red-tape-on-clinical-decision-support-software"> January 2026 Advisory</a>, FDA&rsquo;s updated CDS guidance considers, among other things, whether software is intended to support rather than replace or direct a health care professional&rsquo;s judgment and whether the health care professional can independently review the basis for the software&rsquo;s recommendation. The Discussion Paper carries some of those same concepts into the GenAI context, while recognizing that GenAI-enabled functions can be more dynamic. For instance, a conversational tool might begin by providing general information but become increasingly directive over the course of an interaction. CDRH expressly notes that its consideration of whether a user has sufficient clinical knowledge to independently evaluate an output appears consistent with the CDS statutory exclusion&rsquo;s independent-review criterion. The Discussion Paper does not change FDA&rsquo;s existing CDS policy, and the two frameworks do not map onto each other precisely; rather, the paper suggests that familiar CDS concepts concerning human judgment, independent review, and the nature of a software output may help inform FDA&rsquo;s developing approach to GenAI-enabled devices.</p> <p>The Discussion Paper could raise several practical implications for manufacturers developing GenAI-enabled medical devices. As FDA considers a framework that evaluates both the degree of independence of a software function and the consequences of incorrect outputs, sponsors may need to devote greater attention to characterizing how their products operate, the extent to which users are expected to rely on device outputs, and the potential risks associated with those outputs. More broadly, FDA&rsquo;s focus on periodic re-benchmarking, performance monitoring, and management of model drift suggests that post-market surveillance and lifecycle oversight may become increasingly important aspects of regulatory compliance for GenAI-enabled devices. Companies developing products in this space may therefore wish to consider submitting comments on FDA&rsquo;s proposed competency-based assessment framework, post-market monitoring concepts, and approaches for managing changes to foundation models before the October 19, 2026 comment deadline.</p> <p>The Discussion Paper is nonbinding, is not draft or final guidance, and does not propose changes to FDA policy or establish evidentiary expectations for future marketing submissions. Rather, FDA characterizes the paper as an early-stage effort to solicit stakeholder input that may inform future regulatory approaches for GenAI-enabled devices. An unanswered question is whether implementing the framework proposed in the Discussion Paper will require legislative changes, with FDA noting that the paper is not intended to address whether the approaches therein are within FDA&rsquo;s existing legal authorities or whether new legal authorities would be necessary.</p> <p>Comments are due by October 19, 2026, and should be submitted under docket number FDA-2026-N-7874 on <a rel="noopener noreferrer" href="https://www.regulations.gov/" target="_blank">Regulations.gov</a>.</p> <p>We will continue to monitor FDA&rsquo;s consideration of stakeholder feedback and any further developments regarding the regulation of GenAI-enabled medical devices. If you have any questions or would like more information, please reach out to one of the authors of this Advisory or your existing Arnold &amp; Porter contacts.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{7D56F463-9B6B-4557-A5B6-72C3E85AEFE8}https://www.arnoldporter.com/en/perspectives/advisories/2026/09/ftc-places-redfin-back-on-the-market-reverses-agreement-with-zillowC. Scott Lenthttps://www.arnoldporter.com/en/people/l/lent-c-scottscott.lent@arnoldporter.comPeter G. Daniashttps://www.arnoldporter.com/en/people/d/danias-peterpeter.danias@arnoldporter.comZoe Staumhttps://www.arnoldporter.com/en/people/s/staum-zoe-rachaelzoe.staum@arnoldporter.comThe Federal Trade Commission and five state attorneys general have proposed a settlement requiring Zillow and Redfin to unwind key aspects of a $100 million agreement that allegedly paid Redfin to exit the multifamily rental-advertising market, transfer customers and employees to Zillow, and remain out of the market for up to nine years. The proposed order &mdash; pending approval by the Eastern District of Virginia &mdash; would require Redfin to rebuild an independent online marketplace for multifamily rental listings within six months, while Zillow must remove restrictions on Redfin&rsquo;s reentry, facilitate customer and employee transitions, and refrain from certain hiring practices. The case underscores that competitor partnerships and licensing arrangements may face Section 7 and antitrust scrutiny even when they are not reportable under Hart-Scott-Rodino, particularly where they involve non-competes, transfers of sensitive information, customer relationships, or sales personnel; it also highlights enforcers&rsquo; willingness to use conduct remedies designed to restore lost competition.Tue, 01 Sep 2026 00:00:00 -0500<p> <p>On August 24, 2026, the Federal Trade Commission (FTC), along with five state attorneys general,[[N:The five states, Virginia, Arizona, Connecticut, New York, and Washington, filed their own complaints that were subsequently consolidated with the FTC case.]] filed a proposed settlement requiring Zillow Group, Inc and Zillow, Inc (collectively Zillow) and Redfin Corporation (Redfin) to unwind a $100 million &ldquo;pay-a-rival-to-exit&rdquo; deal and restore Redfin&rsquo;s online marketplace for multifamily rental properties.[[N:Federal Trade Commission, <a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/08/ftc-secures-order-resolving-antitrust-concerns-zillow-redfin-agreement?utm_source=govdelivery" target="_blank">FTC Secures Order Resolving Antitrust Concerns with Zillow-Redfin Agreement</a>, Aug. 24, 2026.]] If accepted by the Eastern District of Virginia, the order would resolve the FTC&rsquo;s antitrust challenge to an arrangement between two of the largest operators of online rental marketplaces where landlords and property management companies pay to advertise vacant units and where renters search for housing.[[N:<a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/ZillowGroup-Complaint.pdf" target="_blank">Complaint</a>, <em>FTC v. Zillow</em>, 1:25 v. 01638 (Sept. 30, 2025) (ECF. No. 2), &para;&para; 1, 24-27. Zillow, Redfin (flagship Rent.com), and CoStar (flagship Apartments.com) are key players in this market. ]] The government alleged that Zillow paid Redfin to shut down its multifamily rental-advertising business, transfer its customers and salesforce to Zillow, and agree to stay out of the market for up to nine years.[[N:Complaint, (ECF. No. 2), pp. 1-2; &para;&para; 7-9.]] The FTC&rsquo;s approach &mdash; challenging the arrangement as an anticompetitive agreement and acquisition &mdash; was solved with an unusual remedy. In lieu of a conventional divestiture, the settlement requires the parties to undo certain restraints and compels Redfin to rebuild an independent, competing online rental listing marketplace for multifamily properties.</p> <h2>Background<span style="font-size: 13px;"></span></h2> <p>The lawsuit[[N:Federal Trade Commission, <a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2025/09/ftc-sues-zillow-redfin-over-illegal-agreement-suppress-rental-advertising-competition" target="_blank">FTC Sues Zillow and Redfin Over Illegal Agreement to Suppress Rental Advertising Competition</a>, Sept. 30, 2025. The FTC filed its Complaint on September 30, 2025 in the U.S. District Court for the Eastern District of Virginia (Alexandria Division), Case No. 1:25-cv-01638, against Zillow Group, Inc., Zillow, Inc. (together, Zillow), and Redfin Corporation (Redfin). Rocket Companies acquired Redfin on July 1, 2025, making Redfin a wholly-owned Rocket subsidiary. Complaint, (ECF. No. 2), &para;&para; 22-23.]] stemmed from two contracts &mdash; a Partnership Agreement and a Content License Agreement &mdash; executed by Zillow and Redfin in February 2025.[[N:Complaint, (ECF. No. 2), &para; 35.]] Under these agreements, according to the FTC, Zillow paid Redfin $100 million to terminate its multifamily property advertising contracts, use &ldquo;reasonable best efforts&rdquo; to move those customers to Zillow, share competitively sensitive information, and help Zillow hire many of Redfin&rsquo;s soon-to-be-terminated employees. Redfin agreed, among other things, to display Zillow&rsquo;s multifamily rental listings (making Zillow the exclusive provider of multifamily listings on Redfin&rsquo;s sites) and to stay out of the market for up to nine years.[[N:Complaint, (ECF. No. 2), &para;&para; 7-8, 37-43, 48.]] Redfin began deactivating listings on its sites in June 2025 for customers who did not transition to Zillow and dismantling services related to its multifamily online listing business.[[N:Complaint, (ECF. No. 2), &para;&para; 45, 50, 84.]]</p> <h2>The FTC&rsquo;s Challenge<span style="font-size: 13px;"></span></h2> <p>The FTC characterized the deal as a payment to a competitor to exit and stay out of a consolidated market. The government emphasized that both agreements expressly disclaimed any joint venture and cast the parties as &ldquo;independent contractors,&rdquo; and pointed out that Zillow categorized the payment on its SEC filing under &ldquo;Intangible Assets&rdquo; as &ldquo;Customer relationships.&rdquo;[[N:Complaint, (ECF. No. 2), &para;&para; 36-37.]] Although the arrangement was not a reportable acquisition under Hart-Scott-Rodino because it did not meet the size thresholds, the FTC alleged that Zillow&rsquo;s purchase of Redfin&rsquo;s customer relationships, key employees, and business information, amounted to an acquisition of assets that is presumptively unlawful under Section 7.[[N:Complaint, (ECF. No. 2), &para;&para; 10, 100-103.]] The agency identified two possible nationwide markets: (1) Internet Listing Services advertising for rental properties, and (2) the narrower market for advertising to managers of multifamily rental properties (i.e., properties with over 25 units).[[N:Internet Listing Services are digital platforms aggregating and displaying multifamily rental properties to prospective tenants; excluding single-family/short-term/vacation-only platforms and general search, generative-AI, or social-media platforms where rentals are incidental. Complaint, (ECF. No. 2), &para;&para; 53-65.]]</p> <h2>The Proposed Remedy<span style="font-size: 13px;"></span></h2> <p>In an unusual move, the proposed settlement requires Redfin to reenter the business it discarded last year. The parties must eliminate any terms barring Redfin from owning and independently operating a rental-advertising internet listing service and limiting Redfin&rsquo;s ability to display its own listings, remove the information-sharing obligations, and modify syndication payments to accommodate re-entry into the market.[[N:<a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/ZillowRedfin-StipFinalOrder.pdf" target="_blank">Stipulated Final Order for Equitable Relief</a> (ECF. No. 400-1), &sect; I.]] For nine months after Redfin rebuilds its listings, Zillow must allow any of the affected advertisers whose contract cannot be canceled within three months to exit or renegotiate without cost or penalty in order to deal with Redfin, and must not otherwise impede customers from contracting with Redfin.[[N:Stip, ECF. No. 400-1, &sect; II.C-D.]] Zillow must allow Redfin to evaluate and re-hire transferred employees without Zillow&rsquo;s intervention for one year and Zillow may not solicit Redfin employees for two years.[[N:Stip, ECF. No. 400-1, &sect; III.A-C.]]</p> <p>Redfin has six months to rebuild its services, including operating a working customer portal and billing system, hiring a General Manager, salesforce, and support team, and advertising to customers or face escalating penalties and contempt.[[N:Stip, ECF. No. 400-1, &sect; IV.]]</p> <h2>Key Takeaways</h2> <p>Companies considering partnerships or licensing deals with competitors should consider the following:</p> <ul> <li><strong>A deal need not be HSR-reportable to draw Section 7 scrutiny</strong>. The agreements here were not reportable under Hart-Scott-Rodino. Yet the government treated the partnership and licensing contracts as an asset acquisition and pursued it as presumptively unlawful. Companies should evaluate risk based on substance and competitive effect, not on its filing obligations or characterization of the deal.</li> <li><strong>Exercise caution when partnering with a rival in a consolidated industry</strong>. The government emphasized that, &ldquo;whether viewed as an agreement to stop competing or as the acquisition of a rival&rsquo;s assets, the effect remains the same.&rdquo;[[N:Complaint, (ECF. No. 2), &para; 11.]] Commitments to non-compete provisions between competitors invite challenge as naked restraints, even when labeled as a partnership or licensing deal. This risk is amplified in markets where only a handful of companies claim most of the revenue.</li> <li><strong>Transfers of sensitive information and personnel between competitors are red flags</strong>. The exchange of competitively sensitive business information and the coordinated hand-off of a rival&rsquo;s salesforce featured prominently in the FTC&rsquo;s theory of harm.</li> <li><strong>Authorities may seek conduct remedies that reconstruct competition</strong>. The order to rebuild a competitor &mdash; with deadlines, capital commitments, hiring facilitation, and penalties &mdash; shows enforcers may be open to remedies other than divestiture to restore a market. The FTC implemented a similar remedy in 2011 following Cardinal Health&rsquo;s acquisition of competitor Biotech&rsquo;s nuclear pharmacies and subsequent closure of its own pharmacies in locations where both operated.[[N:Federal Trade Commission, <a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2011/07/ftc-settles-charges-cardinal-healths-purchase-biotech-was-anticompetitive" target="_blank">FTC Settles Charges That Cardinal Health&rsquo;s Purchase of Biotech Was Anticompetitive</a>, June 21, 2011.]] The government required Cardinal Health to restore and sell those pharmacies, as well as remove other restraints relating to shared information, employee transfers, and customer contracts.</li> <li><strong>State attorneys general are active co-enforcers</strong>. Five states joined the FTC and shared in the settlement, including a $2 million payment and continuing oversight rights.</li> </ul> <p>Companies should treat the government&rsquo;s challenge and proposed order as a signal that partnership and licensing agreements can create antitrust risk and engage antitrust counsel to evaluate such deals before adoption.</p> </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{B07A9355-CE66-426E-BAEB-E183F2D9B182}https://www.biosliceblog.com/2026/09/virtual-and-digital-health-digest-august-2026/Alexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comFabien Royhttps://www.arnoldporter.com/en/people/r/roy-fabienfabien.roy@arnoldporter.comDr. Beatriz San Martinhttps://www.arnoldporter.com/en/people/s/san-martinbeatriz.sanmartin@arnoldporter.comJames Castro-Edwardshttps://www.arnoldporter.com/en/people/c/castro-edwards-jamesjames.castro-edwards@arnoldporter.comEmma Elliston, Ph.D.https://www.arnoldporter.com/en/people/e/elliston-emmaemma.elliston@arnoldporter.comAna González-Lamuñohttps://www.arnoldporter.com/en/people/g/gonzalez-lamuno-anaana.lamuno@arnoldporter.comHeba Jalilhttps://www.arnoldporter.com/en/people/j/jalil-hebaheba.jalil@arnoldporter.comShama Aktarhttps://www.arnoldporter.com/en/people/a/aktar-shamashama.aktar@arnoldporter.comTue, 01 Sep 2026 00:00:00 -0500{E4607063-D194-4089-9FF5-650A04E475A4}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/08/kathleen-harris-discusses-top-white-collar-crime-cases-of-2026-in-law360Kathleen Harris, head of Arnold &amp; Porter&rsquo;s London office, was quoted in the recent <em>Law360 </em>article, &ldquo;The Top White-Collar Crime Cases In 2026: Midyear Review,&rdquo; about two of the most significant white-collar crime developments in the UK thus far in 2026.Mon, 31 Aug 2026 00:00:00 -0500<p>Kathleen Harris, head of Arnold &amp; Porter&rsquo;s London office, was quoted in the recent <em>Law360 </em>article, &ldquo;The Top White-Collar Crime Cases In 2026: Midyear Review,&rdquo; about two of the most significant white-collar crime developments in the UK thus far in 2026.</p> <p>Kathleen commented on the Serious Fraud Office&rsquo;s (SFO) first corporate plea settlement in five years, in which defense contractor Ultra Electronics agreed to pay &pound;15 million after admitting it failed to prevent bribery in pursuit of contracts in Oman and Algeria. She told the publication the agreement showed that despite the SFO&rsquo;s shift toward tackling offending with a domestic impact, the agency remains willing to deal with clear-cut instances of overseas corruption.</p> <p>&ldquo;It is debatable whether the company would have reported the issues if they were uncovered today,&rdquo; she said. &ldquo;Both the domestic and global appetite for tackling corruption are much different than was the case in 2018 when the original self-report was filed.&rdquo;</p> <p>Kathleen also weighed in on the collapse of the SFO&rsquo;s decade-long prosecution in the London Mining case, which fell apart on the eve of trial after the agency discovered roughly 600,000 items of investigation material it had failed to process. She said the case raises serious questions about the SFO&rsquo;s approach to disclosure and its broader credibility.</p> <p>&ldquo;The monetary cost to the taxpayer is one thing, but the loss of credibility means it can have an impact on future practices and cases and give rise to an existential threat to the SFO&rsquo;s future,&rdquo; Kathleen noted.</p> <p><a href="https://www.law360.com/articles/2516805">Read the full article</a> (subscription required).</p>{C2DB7256-500B-4085-825A-31A2347F16D8}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/08/bloomberg-law-features-abby-parsons-in-texas-qaAbby Parsons, a Houston-based partner in Arnold &amp; Porter&rsquo;s Intellectual Property practice, was featured in a recent <em>Bloomberg Law </em>&ldquo;Texas Brief&rdquo; newsletter, discussing why damages awards in intellectual property cases have grown so much larger in recent years.Mon, 31 Aug 2026 00:00:00 -0500<p>Abby Parsons, a Houston-based partner in Arnold &amp; Porter&rsquo;s Intellectual Property practice, was featured in a recent <em>Bloomberg Law </em>&ldquo;Texas Brief&rdquo; newsletter, discussing why damages awards in intellectual property cases have grown so much larger in recent years.</p> <p>Abby explained that federal juries have become far more receptive to big-dollar verdicts than they were even a few years ago, giving plaintiffs&rsquo; lawyers room to ask for sums that once would have seemed out of reach.</p> <p>&ldquo;As a plaintiff lawyer, you can get much more aggressive in your request to juries, more so than you could before,&rdquo; she said. &ldquo;Whereas before I couldn&rsquo;t stand up in front of a jury and ask with a straight face for a billion dollars, I can absolutely do that now. And the juries, they don&rsquo;t bat an eye.&rdquo;</p> <p>That same willingness to award large sums has changed how defense teams build their cases, Abby said. Because appellate courts have reversed many of these outsized verdicts, defense lawyers now spend much of the trial closely scrutinizing how the other side calculated its damages number, rather than waiting until after the verdict to challenge it.</p> <p>&ldquo;As a defendant, you&rsquo;re picking apart damages models all through the trial case, because the federal circuit and other appellate courts are being the backstops and flipping a lot of these big verdicts,&rdquo; she said.</p> <p>Abby also noted several other trends, including the impact of artificial intelligence on patent law and the growth of the Texas legal market.</p> <p><a href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.bloomberglaw.com%2Fproduct%2Fblaw%2Fbloomberglawnews%2Fbloomberg-law-news%2FX15QJNMD7D081LA2574B0D1IE91%3Fcriteria_id%3Da5061dbaf4e3389c93cb7d1f4ad1c9be%26search32%3DPSd5wO5hCbhH6E8dmEZHAw%3D%3DD3_0ooIaO0JhMDIUokECMYDRLqVdgjKHp_elyiiJJ9Nuha7H1o599prJ-PFGhhS58xEaH_Rvva9_CCmp1sEXfg%3D%3D&amp;data=05%7C02%7CEmma.Ruberg%40arnoldporter.com%7C5842d1521cbb4b6864ef08df0773c785%7Cd22d141fae37447facfa2e1d0e5b4969%7C0%7C0%7C639237865973271566%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&amp;sdata=Ct%2FJrQXG9lGKkGczyUgp1SdLrWLZfkCKhDnytQ297uc%3D&amp;reserved=0">Read the full Q&amp;A</a>&nbsp;(subscription required).</p>{F8EA4D02-04CD-47D7-B214-F43AE7336A0D}https://www.arnoldporter.com/en/perspectives/news/2026/08/new-york-law-journal-recognizes-jennifer-kwapisz-as-a-rising-starArnold &amp; Porter partner Jennifer Kwapisz was named a Rising Star in the Products Liability/Mass Torts category at the 2026 New York Legal Awards, presented by the <em>New York Law Journal</em>. This award recognizes the region's most promising lawyers under 40.Mon, 31 Aug 2026 00:00:00 -0500<p>Arnold &amp; Porter partner Jennifer Kwapisz was named a Rising Star in the Products Liability/Mass Torts category at the 2026 New York Legal Awards, presented by the <em>New York Law Journal</em>. This award recognizes the region's most promising lawyers under 40.</p> <p>Jennifer Kwapisz practices in the areas of complex, mass tort, and environmental litigation. Her experience includes representing clients in class action and toxic tort matters involving claims for personal injury, property damage, and medical monitoring, including claims concerning exposure to radioactive materials and PFAS, and in multijurisdictional disputes brought by state and local governments involving allegations of coastal land loss, contamination, climate change, and other environmental harm. She also defends clients against public nuisance and other state law claims alleging damage to natural resources and has advised clients on PFAS litigation risks. In addition, Jennifer advises owners and operators of commercial facilities facing litigation regarding compliance with the Americans with Disabilities Act. Her experience includes litigation in both federal and state court, at both the trial and appellate court levels.</p>{70F2EDE4-4FFE-43DD-B3D5-1499E26ED7B9}https://www.arnoldporter.com/en/perspectives/news/2026/08/latinvex-recognizes-carlos-lobo-in-2026-latin-americas-top-100-lawyers-listNew York-based Mergers &amp; Acquisitions partner Carlos Lobo was named to <em>Latinvex&rsquo;s</em> 2026 list of &ldquo;Latin America&rsquo;s Top 100 Lawyers,&rdquo; which recognizes the leading attorneys from international law firms that are involved in the legal business in Latin America. The selection is based on a combination of factors, including recent track record on major deals and business.Wed, 26 Aug 2026 00:00:00 -0500<p>New York-based Mergers &amp; Acquisitions partner Carlos Lobo was named to <em>Latinvex&rsquo;s</em> 2026 list of &ldquo;Latin America&rsquo;s Top 100 Lawyers,&rdquo; which recognizes the leading attorneys from international law firms that are involved in the legal business in Latin America. The selection is based on a combination of factors, including recent track record on major deals and business.</p> <p> </p> <p>Carlos focuses on a broad range of transactions in the Latin America region or involving Latin American companies in the U.S., including mergers and acquisitions, private equity and venture capital investment, and capital markets. He has 28 years of experience representing clients in complex cross border M&amp;A transactions, joint ventures, private equity and venture capital investments, and de-SPAC transactions.</p>{0CA0059E-BFEF-4885-8E15-AEBCCAD17133}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/prediction-markets-at-a-crossroadsMohamed Al-Hendyhttps://www.arnoldporter.com/en/people/a/al-hendy-mohamedmohamed.al-hendy@arnoldporter.comKenesha Starling Duncanhttps://www.arnoldporter.com/en/people/s/starling-kenesha-duncankenesha.starling@arnoldporter.comBrent P. Rayhttps://www.arnoldporter.com/en/people/r/ray-brent-pbrent.ray@arnoldporter.comAdrien K. Andersonhttps://www.arnoldporter.com/en/people/a/anderson-adrien-kadrien.anderson@arnoldporter.comPrediction markets are exchange platforms that allow participants to trade event contracts whose value depends on the outcome of a future event. A typical event contract poses a yes-or-no question &mdash; such as whether a particular candidate will win an election, the Federal Reserve will cut interest rates, or a team will win a sporting event &mdash; and settles at a fixed value if the specified event occurs or at zero if it does not. Although prediction markets have existed for decades, they entered the public mainstream during the 2024 presidential election, when billions of dollars flowed into retail-facing, election-related, event contracts. The growth of event contracts accelerated dramatically in 2025 as sports replaced politics as a principal driver of trading activity. Combined global trading volume on leading platforms Kalshi and Polymarket reportedly exceeded $40 billion in 2025, compared with roughly $9 billion in 2024, and continued climbing in 2026. Sports are central to that expansion: since July 2024, sports contracts accounted for approximately 80% of Kalshi&rsquo;s trading volume and 39% of Polymarket&rsquo;s.&nbsp;That growth has brought prediction markets into direct conflict with state gaming regulators.Wed, 26 Aug 2026 00:00:00 -0500<h2>Introduction and Regulatory Background</h2> <p>Prediction markets are exchange platforms that allow participants to trade event contracts whose value depends on the outcome of a future event. A typical event contract poses a yes-or-no question &mdash; such as whether a particular candidate will win an election, the Federal Reserve will cut interest rates, or a team will win a sporting event &mdash; and settles at a fixed value if the specified event occurs or at zero if it does not. Although prediction markets have existed for decades, they entered the public mainstream during the 2024 presidential election, when billions of dollars flowed into retail-facing, election-related, event contracts. The growth of event contracts accelerated dramatically in 2025 as sports replaced politics as a principal driver of trading activity. Combined global trading volume on leading platforms Kalshi and Polymarket reportedly exceeded $40 billion in 2025, compared with roughly $9 billion in 2024, and continued climbing in 2026. Sports are central to that expansion: since July 2024, sports contracts accounted for approximately 80% of Kalshi&rsquo;s trading volume and 39% of Polymarket&rsquo;s.[[N: Kaitlyn Radde, <em><a rel="noopener noreferrer" href="https://www.pewresearch.org/short-reads/2026/05/27/trading-volume-on-prediction-markets-has-soared-in-recent-months/" target="_blank">Trading Volume on Prediction Markets Has Soared in Recent Months</a></em>, Pew Rsch. Ctr. (May 27, 2026).]]</p> <p>That growth has brought prediction markets into direct conflict with state gaming regulators. State regulators contend that some event contracts offered by prediction market platforms amount to sports wagering subject to state gaming laws and licensing requirements. Kalshi and other platform operators respond that these event contracts are federally regulated derivatives outside the authority of state gaming commissions. As of the date of this Advisory, courts have issued conflicting decisions on these issues with significant implications for both the prediction-market industry and the traditional state regulation of gaming.</p> <p>Understanding the legal landscape requires a brief primer on the regulatory framework. Although not specifically defined under the Commodity Exchange Act (CEA), event contracts historically have been treated as swaps or futures contracts.&nbsp;As such, markets that offered event contracts for public trading were required to register with the Commodity Futures Trading Commission (CFTC) as a designated contract market (DCM). The CEA grants the CFTC exclusive regulatory and enforcement jurisdiction over transactions involving swaps and futures contracts traded on registered DCMs. See 7 U.S.C. &sect; 2(a)(1)(A). The CEA also grants the CFTC the authority to evaluate and determine whether event contracts offered by DCMs are contrary to the public interest because they involve, among other things, &ldquo;gaming&rdquo; or &ldquo;activity that is unlawful under any Federal or State law.&rdquo; 7 U.S.C. &sect; 7a-2(c)(5)(C). Historically, the CFTC expressed skepticism about whether some sports-related event contracts serve a legitimate economic purpose, but had not categorically prohibited them.</p> <p>This statutory architecture, coupled with the significant growth in public interest, has teed up a question now dividing federal and state courts across several jurisdictions about the legality and regulatory oversight of sports-related event contracts: do state gaming laws apply to sports-related event contracts offered on a federally regulated exchange, or does the CEA preempt their application?</p> <p>Dozens of prediction-market cases are now pending across the country in numerous federal circuits and more than 20 states. These cases involve several types of litigants with vested interest in the oversight of sports-related event contracts, including state gaming regulators and attorneys general, prediction-market platforms, tribal gaming authorities, the CFTC, and the Department of Justice. This Advisory does not attempt to catalogue the broad and rapidly developing body of litigation. Rather, it focuses on three cases that illustrate the growing split among courts and the differing approaches courts have taken on the interaction between the CEA and state gaming laws.</p> <p>In each of the cases below, Kalshi argues that sports-related event contracts fall within the CEA&rsquo;s derivatives framework and, when traded on a DCM, within the CFTC&rsquo;s exclusive jurisdiction. State authorities respond that Congress did not eliminate their traditional power to regulate gaming merely because a sports wager is packaged as a tradable contract on a federally regulated exchange.</p> <p>Each case demonstrates that the dispute across the broader prediction-market litigation landscape is not solely whether sports-related event contracts constitute gaming under state law.&nbsp;The cases turn on threshold questions under the CEA: whether these sports-related event contracts are &lsquo;swaps&rsquo; and, if so, whether the CEA&rsquo;s grant of exclusive jurisdiction to the CFTC preempts state laws that would otherwise regulate or prohibit those contracts.&nbsp;</p> <h2>The Emerging Split</h2> <h3>New Jersey &mdash; <em>KalshiEX LLC v. Flaherty</em></h3> <p>New Jersey was among the first states to test the preemption question. The New Jersey Division of Gaming Enforcement informed Kalshi that its sports event contracts constituted sports wagering requiring a state license. Kalshi sued in federal court, arguing that the CEA preempted New Jersey&rsquo;s regulation. The district court granted a preliminary injunction. In April 2026, the U.S. Court of Appeals for the Third Circuit affirmed. <em>KalshiEX LLC v. Flaherty</em>, 172 F.4th 220, 232 (3d Cir. 2026). The Third Circuit agreed with the district court that Kalshi demonstrated a reasonable likelihood of success in showing that its sports event contracts qualify as &ldquo;swaps&rdquo; traded on a CFTC-licensed DCM and therefore fall within the CFTC&rsquo;s exclusive jurisdiction. Id. at 228-29. It also emphasized that Congress expressly contemplated event contracts involving &ldquo;gaming&rdquo; and gave the CFTC authority to review and prohibit such contracts. Id. at 231. Further, the court reasoned that Congress&rsquo; decision to include gaming within the CEA&rsquo;s event-contract framework &mdash; rather than excluding gaming-related contracts from federal oversight &mdash; demonstrated an intent to keep those contracts within the CFTC&rsquo;s regulatory ambit, subject to whatever restrictions the commission might impose. Id. at 227. </p> <p>Despite a divided panel, the majority&rsquo;s reasoning in<em> Flaherty</em> is the strongest appellate authority to date supporting Kalshi&rsquo;s preemption theory. But that guidance is limited: the Third Circuit reviewed only the propriety of a preliminary injunction, and its decision, while it addresses Kalshi&rsquo;s likelihood of success on the merits in that context, cannot be read as a decision on any dispositive motion. See id. at 232. The decision nevertheless provides a significant roadmap for future cases.</p> <h4>Nevada &mdash; <em>KalshiEX LLC v. Hendrick</em></h4> <p>Faced with the same basic preemption question, the Nevada district court reached the opposite conclusion. After the Nevada Gaming Control Board sent Kalshi a cease-and-desist letter stating that it was operating an &ldquo;unlicensed sports pool in violation of Nevada gaming law,&rdquo; Kalshi filed a federal preemption challenge. <em>KalshiEX LLC v. Hendrick</em>, 817 F. Supp. 3d 1014, 1021 (D. Nev. 2025). The district court initially granted Kalshi a preliminary injunction, reasoning that the CFTC had exclusive jurisdiction over contracts listed on a DCM and that Nevada gaming law was preempted. Id. But in November 2025, after considering intervening rulings in other cases, the court dissolved the injunction. Id. at 1021-22.</p> <p>In reversing course, the district court emphasized states&rsquo; traditional authority to regulate gaming and concluded that Kalshi&rsquo;s sports contracts were, &ldquo;at bottom,&rdquo; sports wagers. <em>Hendrick</em>, 817 F. Supp. 3d at 1029. It rejected Kalshi&rsquo;s broad interpretation of &ldquo;swaps,&rdquo; reasoning that it could &ldquo;sweep nearly all sports wagering into the CFTC&rsquo;s exclusive jurisdiction&rdquo; and would extend the CEA far beyond the financial products Congress targeted when it expanded federal swaps regulation after the 2007-2008 financial crisis. Id. at 1030-31. Nevada has also pursued state-law enforcement against Kalshi, making the jurisdiction a particularly vivid example of the collision between federal derivatives regulation and state gaming authority. The Ninth Circuit heard argument in April 2026, and its forthcoming decision could create a circuit split with the Third Circuit or bring the two circuits into alignment.</p> <h3>Utah &mdash; <em>KalshiEX LLC v. Cox</em></h3> <p>The district court in Utah issued the most recent ruling favoring state authority. Kalshi challenged Utah&rsquo;s ability to enforce its anti-gambling statutes against sports event contracts, raising substantially the same federal-preemption theory it advanced in New Jersey and Nevada. In August 2026, however, the U.S. District Court for the District of Utah granted the state&rsquo;s motion for summary judgment and rejected Kalshi&rsquo;s preemption claim on the merits. <em>KalshiEX LLC v. Cox</em>, 2026 WL 2241564, at *1 (D. Utah Aug. 4, 2026).</p> <p>The court acknowledged that the CEA gives the CFTC exclusive jurisdiction over swaps traded on DCMs, but concluded that the statute does not displace state gambling regulation. <em>Cox</em>, 2026 WL 2241564, at *7-8. In particular, the court read the CEA&rsquo;s jurisdictional and preemption provisions as leaving room for state law and concluded that &ldquo;enforcement of State gambling laws is not inconsistent with the CFTC&rsquo;s regulation and oversight of derivatives markets.&rdquo; Id. at *13.</p> <p><em>Cox</em> is significant not only for its substantive holding but also for its posture. Unlike the New Jersey and Nevada district court rulings, which arose at the preliminary-injunction stage, Cox resolved the preemption issue on summary judgment. Kalshi appealed the following day, creating another vehicle for appellate consideration of the disagreement reflected in <em>Flaherty</em>, <em>Hendrick</em>, and <em>Cox</em>.</p> <h2>What the Litigation Is <em>Really</em> About</h2> <p>The competing characterizations of sports-related event contracts across the litigation landscape have created a tension between the economic substance and the legal classification of these contracts. An event contract that pays based on whether the Dallas Cowboys beat the Philadelphia Eagles may look economically indistinguishable from a sportsbook wager on the same game. But if the contract is classified as a federally regulated &ldquo;swap,&rdquo; its legal classification may bear on whether, and to what extent, the CEA preempts the application of state gaming laws. The emerging disagreement among courts is, therefore, not merely about how these event contracts operate, but the legal consequence of a swap classification under the CEA. In the Kalshi cases, the Third Circuit read the statute to favor federal exclusivity, while district courts in Nevada and Utah determined the statute did not displace state regulatory authority.</p> <h2>Where the Field Is Heading</h2> <p><strong>More appellate guidance is coming</strong>. The Third Circuit&rsquo;s <em>Flaherty</em> decision favors federal preemption; the Ninth Circuit has heard argument in <em>Hendrick</em>; and Kalshi has appealed <em>Cox</em> to the Tenth Circuit. New Jersey, meanwhile, obtained an extension through September 4, 2026, to seek Supreme Court review of <em>Flaherty</em>. Other appellate proceedings are also underway, including an expedited Sixth Circuit appeal arising from Ohio. The next several months could therefore produce significant appellate guidance &mdash; and potentially a circuit split that may ultimately require resolution by the U.S. Supreme Court.&nbsp;</p> <p><strong>The CFTC is increasingly defending its turf</strong>. The CFTC has filed amicus briefs or intervened in multiple proceedings, and, in some instances, filed its own actions together with the DOJ against several states seeking to enjoin enforcement of state gaming laws against CFTC-registered DCMs. The CFTC has argued that state gaming regulators are intruding on exclusive federal jurisdiction granted by the CEA over DCM-listed contracts. Its participation, along with the DOJ on behalf of the U.S. government, makes clear that these disputes are no longer only between individual prediction-market operators and state regulators. Moreover, in June 2026, the CFTC put forward proposed amendments&nbsp;to its event-contract regulations to clarify the federal framework for prediction markets, while separately maintaining that the CEA grants it exclusive jurisdiction.</p> <p><strong>Congress may ultimately need to clarify the boundary</strong>. Congressional interest in prediction markets has increased, but Congress has not yet proposed a framework with a solution. While a proposed bill has circulated that would prohibit CFTC-registered entities from listing contracts that resemble sports wagers or casino-style games, broader proposed measures have emerged over concerns about event contracts that involve war, terrorism, and assassination. The wide breadth of concerns over event contracts, including trading on nonpublic information, may result in Congress addressing sports-related event contracts as part of a broader framework addressing a booming area of public interest. In the meantime, it may be that the CFTC&rsquo;s proposed regulations provide some of this clarity.</p> <p>As the Supreme Court observed in <em>Murphy v. NCAA</em>, Congress may regulate sports gambling directly, but absent federal regulation, states remain free to act on their own. 584 U.S. 453, 486-87 (2018). Although <em>Murphy</em> was not a CEA case, the current litigation exposes an unresolved boundary between federal derivatives law and state and tribal gaming regimes that were not designed with today&rsquo;s retail sports prediction markets in mind.</p> <h2>Conclusion</h2> <p>The expansion of prediction markets into sports has transformed what was once largely a derivatives-regulation question into a significant federalism and gaming-law dispute with national implications. <em>Flaherty</em>, <em>Hendrick</em>, and <em>Cox </em>illustrate sharply divergent judicial approaches to the same fundamental question, and the next round of appellate decisions may determine whether sports-focused prediction markets operate under a uniform federal framework or must contend with a patchwork of state-by-state gaming restrictions.</p> <p>For companies operating in, or considering entry into, the event contracts and prediction markets space, the legal landscape remains unsettled. Until the preemption issue is resolved through further appellate guidance, agency action, or legislation, companies should closely monitor developments and evaluate the federal, state, and, where applicable, tribal-law requirements that may apply to their particular products, activities, and jurisdictions. Federal registration or compliance with one regulatory regime may not, by itself, resolve all potential obligations. Companies should therefore assess the need for appropriate licensing, product restrictions, consumer-protection controls, and related compliance measures.</p> <p>Arnold &amp; Porter attorneys are closely monitoring these cases and the rapidly developing prediction-market landscape. Clients with questions regarding these developments or their potential implications should contact the authors or their regular Arnold &amp; Porter contacts.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{8956175D-AA42-4043-8E64-2A6177323F9C}https://www.arnoldporter.com/en/perspectives/news/2026/08/arnold-porter-advises-volaris-group-on-acquisition-of-l5-networksArnold &amp; Porter recently advised Volaris Group in its acquisition of L5 Networks, a Brazilian provider of cloud-based corporate communications solutions and omnichannel and corporate collaboration platforms.Tue, 25 Aug 2026 00:00:00 -0500<p> Arnold &amp; Porter recently advised Volaris Group in its acquisition of L5 Networks, a Brazilian provider of cloud-based corporate communications solutions and omnichannel and corporate collaboration platforms. Volaris Group is an operating group of Constellation Software Inc., a Canadian-based company that acquires and develops technology companies serving vertical markets.</p> <p>The Arnold &amp; Porter team was led by Mergers &amp; Acquisitions partner Carlos Lobo.</p>{529F2FC2-CC31-47B7-A6E6-F8E994C57B74}https://www.arnoldporter.com/en/perspectives/news/2026/08/arnold-porter-strengthens-financial-services-bench-with-addition-of-partner-brendan-clegg<strong>WASHINGTON, D.C., August 24, 2026</strong> &mdash; Arnold &amp; Porter announced today that Brendan Clegg has joined the Financial Services practice as a partner resident in the firm&rsquo;s Washington, D.C. office. Brendan joins the firm with nearly 15 years of experience in the public and private sectors, including as enforcement counsel at the Office of the Comptroller of the Currency (OCC).Mon, 24 Aug 2026 00:00:00 -0500<p><strong>WASHINGTON, D.C., August 24, 2026</strong> &mdash; Arnold &amp; Porter announced today that Brendan Clegg has joined the Financial Services practice as a partner resident in the firm&rsquo;s Washington, D.C. office. Brendan joins the firm with nearly 15 years of experience in the public and private sectors, including as enforcement counsel at the Office of the Comptroller of the Currency (OCC).</p> <p> </p> <p>Brendan represents national and state-chartered banks and financial services providers in a variety of regulatory, transactional, licensing, and enforcement matters. He has advised clients on matters before the OCC, Federal Deposit Insurance Corporation, Federal Reserve Board, Consumer Financial Protection Bureau, Financial Crimes Enforcement Network, National Credit Union Administration, and state banking regulators and attorneys general. Brendan assists clients in addressing supervisory findings and navigating regulatory examinations conducted by these agencies. In the past few years, he has advised banks and other financial institution clients on numerous corporate transactions, including various M&amp;A deals. He also represents banks and non-banks and their directors and officers in enforcement actions, administrative proceedings, and investigations. Brendan regularly counsels clients on consumer compliance, anti-money laundering, safety and soundness, risk management, and corporate governance issues.</p> <p>Kevin Toomey, chair of Arnold &amp; Porter&rsquo;s Financial Services practice group, said: &ldquo;Brendan&rsquo;s sophisticated expertise across regulatory, transactional, and enforcement matters will be invaluable in serving the needs of our clients.&rdquo; In joining the firm, Brendan said: &ldquo;Arnold &amp; Porter has an excellent reputation in the financial services industry for providing strategic advice to banks and other financial institutions on a range of regulatory, compliance, litigation and transactional matters. I&rsquo;m excited to join a platform that combines these capabilities and to leverage the firm&rsquo;s expertise and depth in this sector. As the regulatory landscape continues to evolve, I look forward to advising clients alongside such a talented group of attorneys working in this space.&rdquo;</p> <p>Brendan earned his J.D. from William &amp; Mary Law School, <em>summa cum laude</em>, and his B.A. from Colgate University, <em>magna cum laude</em>. He served as a law clerk for the U.S. District Court in the Eastern District of New York. </p> <h3>About Arnold &amp; Porter</h3> <p><em>Arnold &amp; Porter combines sophisticated regulatory, litigation, and transactional capabilities to resolve clients&rsquo; most complex issues. With over 1,000 lawyers practicing in 16 offices worldwide, we offer an integrated approach that spans more than 40 practice areas. Through multidisciplinary collaboration and focused industry experience, we provide innovative and effective solutions to mitigate risks, address challenges, and achieve successful outcomes.</em></p>{9366ECD3-36D6-425D-A1B6-86969C7B83B5}https://www.arnoldporter.com/en/perspectives/news/2026/08/arnold-porter-advises-oneview-commerce-on-epos-contract-with-uk-post-officeArnold &amp; Porter advised OneView Commerce on its contract with the United Kingdom Post Office for an electronic point-of-sale (EPOS) system.Mon, 24 Aug 2026 00:00:00 -0500<p>Arnold &amp; Porter advised <a href="https://corporate.postoffice.co.uk/media-centre/#/pressreleases/all-suppliers-now-in-place-for-horizon-replacement-programme-as-post-office-signs-contracts-with-oneview-commerce-and-escher-3462058">OneView Commerce</a> on its contract with the United Kingdom Post Office for an electronic point-of-sale (EPOS) system. The contract comes as part of the Post Office&rsquo;s replacement of its current Horizon system. </p> <p>The Arnold &amp; Porter team was led by Corporate &amp; Finance partner Jeremy Willcocks and included associate Matty Desmond. Partner John Schmidt advised on antitrust matters.</p>{719520BD-B5E8-4293-B6E8-052381C6C584}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/bis-issues-final-rule-easing-drone-export-controls-alongside-presidents-new-tariffs-on-drone-importsJohn P. Barkerhttps://www.arnoldporter.com/en/people/b/barker-john-pjohn.barker@arnoldporter.comDeborah A. Curtishttps://www.arnoldporter.com/en/people/c/curtis-deborahdeborah.curtis@arnoldporter.comLynn Fischer Foxhttps://www.arnoldporter.com/en/people/f/fischer-fox-lynnlynn.fischerfox@arnoldporter.comNicholas L. Townsendhttps://www.arnoldporter.com/en/people/t/townsend-nicholas-lnicholas.townsend@arnoldporter.comTrevor G. Schmitthttps://www.arnoldporter.com/en/people/s/schmitt-trevor-gtrevor.schmitt@arnoldporter.comBell Johnsonhttps://www.arnoldporter.com/en/people/j/johnson-bellbell.johnson@arnoldporter.comSarah Belmonthttps://www.arnoldporter.com/en/people/b/belmont-sarahsarah.belmont@arnoldporter.comDustin Veseyhttps://www.arnoldporter.com/en/people/v/vesey-dustindustin.vesey@arnoldporter.comKristina Lorchhttps://www.arnoldporter.com/en/people/l/lorch-kristinakristina.lorch@arnoldporter.comOn August 13, 2026, the U.S. government took two actions aimed at strengthening the competitiveness of its domestic drone industry.&nbsp;First, the U.S. Department of Commerce&rsquo;s Bureau of Industry and Security issued a final rule, effective immediately, that eases export control restrictions on many commercial unmanned aerial vehicles (UAVs or drones), related parts and components, and associated software and technology. Second, President Donald Trump issued a presidential proclamation implementing Section 232 tariffs on certain drones and critical components. Taken together, these measures are designed to support the growth of the domestic drone sector by easing exports of lower-risk commercial UAVs, promoting U.S.-based manufacturing and sourcing by restricting imports, and maintaining controls on advanced technologies that raise national security concerns if transferred to certain foreign actors.Mon, 24 Aug 2026 00:00:00 -0500<p> <p>On August 13, 2026, the U.S. government took two actions aimed at strengthening the competitiveness of its domestic drone industry. First, the U.S. Department of Commerce&rsquo;s Bureau of Industry and Security (BIS) issued a <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/08/14/2026-16628/streamlining-export-controls-for-drone-exports" target="_blank">final rule</a>, effective immediately, that eases export control restrictions on many commercial unmanned aerial vehicles (UAVs or drones), related parts and components, and associated software and technology. Second, President Donald Trump issued a presidential proclamation implementing Section 232 tariffs on certain drones and critical components. Taken together, these measures are designed to support the growth of the domestic drone sector by easing exports of lower-risk commercial UAVs, promoting U.S.-based manufacturing and sourcing by restricting imports, and maintaining controls on advanced technologies that raise national security concerns if transferred to certain foreign actors.</p> </p> <h2>BIS&rsquo;s Reduced Export Controls on UAVs</h2> <p>BIS&rsquo;s final rule implements part of <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2025/06/11/2025-10814/unleashing-american-drone-dominance" target="_blank">Executive Order 14307</a>, &ldquo;Unleashing American Drone Dominance,&rdquo; issued on June 6, 2025, which directed the Departments of Commerce, Energy, State, and Defense to review and revise restrictions under the Export Administration Regulations (EAR) to facilitate the export of UAVs to foreign partners. The most significant changes brought about by BIS&rsquo;s new rule are that BIS removed National Security Column 2 (NS2) controls from Export Control Classification Number (ECCN) 9A012.a, eliminated wind gust tolerance as a control parameter, and increased the endurance threshold for national security controls from 30 minutes to three hours. As a result, drones with a maximum endurance of less than three hours generally will be controlled only for anti-terrorism (AT) reasons. UAVs with an endurance of three hours or more will continue to be controlled for National Security Column 1 (NS1) and AT reasons. </p> <p>The rule does not relax controls on certain higher-risk UAV capabilities. Drones with a range of at least 300 kilometers (approximately 186 miles), or that otherwise meet the parameters of ECCN 9A120, remain subject to Missile Technology (MT) controls. BIS also retained heightened controls for certain UAVs, regardless of endurance, that incorporate specified lasers, thermal imaging equipment, or navigation systems. According to BIS, these controls are intended to prevent adversaries from acquiring sensitive optical or navigational equipment by buying inexpensive, low-endurance drones fitted with high-performance, easily detachable payloads or equipment.</p> <p>BIS also made conforming changes to UAV-related software and technology controls. As a result, many commercial drones, as well as related software and technology, may now be exported, reexported, or transferred (in-country) to most destinations on a No License Required (NLR) basis. However, BIS preserved military end-use or military end-user restrictions by adding ECCNs 9A012, 9D001, 9D002, 9D004, and 9E001 to Supplement No. 2 to Part 744 of the EAR.</p> <p>The rule also clarifies the treatment of UAVs designed for military applications. BIS explained that certain drones not covered by the International Traffic in Arms Regulations&rsquo; (ITAR) U.S. Munitions List (USML) may nevertheless be classified under ECCN 9A610 if they are designed or modified with military-specific capabilities that would not ordinarily be included in a commercial product. BIS further expanded the availability of License Exception Strategic Trade Authorization (STA) for certain UAVs classified under ECCN 9A610 and destined for Country Group A:5 countries. This expanded eligibility is available only where the UAV does not exceed specified capability thresholds, including the ability to deliver a payload of 500 kg (approximately 1,102 pounds) to a range of at least 300 km.&nbsp;</p> <p>Overall, the rule represents a meaningful relaxation of restrictions for many commercial UAVs and related software or technology. BIS&rsquo;s stated objective is to better align the EAR with the current drone landscape by removing restrictions on widely available commercial capabilities while focusing controls on UAVs that present more significant national security concerns.</p> <h2>President Trump&rsquo;s New Tariffs on UAV Imports</h2> <p>On the same day BIS issued its final rule, President Trump issued a <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/08/19/2026-16979/adjusting-imports-of-unmanned-aircraft-systems-and-unmanned-aircraft-systems-components-into-the" target="_blank">proclamation</a> under Section 232 of the Trade Expansion Act of 1962, imposing tariffs on UAVs and related components. The proclamation follows an investigation by the Commerce Department that determined imports of such items may threaten U.S. national security due to foreign supply-chain dependence, cybersecurity concerns, and inadequate domestic production capacity to meet anticipated military and commercial demand. </p> <p>Effective September 3, 2026, imports of (1) drones with a maximum take-off weight of more than 25 kilograms (approximately 55 pounds), (2) drones that integrate thermal imagers, (3) drone docking stations, and (4) certain drone components will be subject to a 100% tariff. The products covered by this tariff are identified by the respective Harmonized Tariff Schedule (HTS) Codes in <a rel="noopener noreferrer" href="https://www.whitehouse.gov/wp-content/uploads/2026/08/ANNEX-I-1.pdf" target="_blank">Annex I</a>. Other drones with a maximum take-off weight of 25 kilograms or less will be subject to a 25% tariff, with the covered products identified by HTS Code in <a rel="noopener noreferrer" href="https://www.whitehouse.gov/wp-content/uploads/2026/08/Annex-II-1.pdf" target="_blank">Annex II</a>. Meanwhile, starting on February 9, 2027, certain drone components identified by their HTS Codes in <a rel="noopener noreferrer" href="https://www.whitehouse.gov/wp-content/uploads/2026/08/Annex-III.pdf" target="_blank">Annex III</a> will be subject to a 25% tariff. The proclamation delays implementation for companies included in the Department of Defense&rsquo;s Blue UAS Cleared List, the Blue UAS Framework, or the Federal Communications Commission&rsquo;s Conditional Approval List as of September 2, 2026 until February 9, 2027. The delayed implementation covers Covered Products that are included on the FCC&rsquo;s Conditional Approval List and their components, as well as products included on the Department of Defense&rsquo;s Blue UAS Cleared List and their components.</p> <p>Lower tariff rates will be applied to products of European Union member states, Japan, South Korea, Taiwan, Switzerland, Liechtenstein, and the United Kingdom. Qualifying U.K. products will be subject to a total duty rate not to exceed 10%, while qualifying products from the other jurisdictions will face a maximum duty rate of 15%. These reduced rates are only available &ldquo;if substantially all the critical components and technology are certified by importers to be products&rdquo; of those countries or of the United States.&nbsp;</p> <p>Companies should be aware that the tariff regime remains subject to change, as the proclamation grants the Secretary of Commerce broad authority to expand tariff coverage to additional UAV components and to revise prior coverage determinations as national security considerations evolve.</p> <p>The proclamation also directs the Secretary of Commerce to establish an onshoring incentive program. Under the program, companies that commit to building, expanding, or refurbishing U.S. facilities for the production of UAVs and related components, may qualify for temporary relief from Section 232 duties on certain imported products and production equipment while those facilities are under development. To qualify for tariff relief, construction must begin before the end of the Trump administration on January 20, 2029.</p> <p>The Secretary of Commerce is authorized to approve onshoring plans and may consider the following factors: (1) whether the plan has received conditional approval from the Departments of Defense and Homeland Security, (2) the anticipated start date, (3) the reasonableness of the project&rsquo;s timeline and milestones, (4) projected annual production capacity, and (5) the manner in which any tariff-related benefits will be allocated among participants.&nbsp;</p> <h2>Takeaways</h2> <p>These regulatory developments reflect the Trump administration&rsquo;s ongoing efforts to advance national security and industrial policy objectives in the UAV market. Together, the BIS rule and the new Section 232 tariffs are intended to strengthen the competitiveness of the domestic drone industry by facilitating broader access in foreign markets while incentivizing domestic production and supply chain localization by imposing tariffs on imports. Companies operating in the UAV sector should carefully evaluate both the opportunities created by the revised export controls and the potential costs and sourcing implications associated with the new tariffs. Businesses should also monitor any future development closely as the U.S. government may continue to refine the regulatory framework in the drone sector.&nbsp;</p> <p>Arnold &amp; Porter will continue to monitor developments in this area. For questions about BIS&rsquo;s final rule, the new tariffs, or other national security and trade issues, please contact the authors or any of their colleagues in Arnold &amp; Porter&rsquo;s <a href="/en/services/capabilities/industries/national-security-and-defense">National Security &amp; Defense</a>&nbsp;or <a href="/en/services/capabilities/practices/international-trade" target="_self">International Trade</a> practice groups.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{17A19690-6073-4CEC-8B62-ADDA4A0F471F}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/carbon-capture-pooling-statutes-after-north-dakota-rulings-lessons-for-regulators-and-developersSamuel Pickerillhttps://www.arnoldporter.com/en/people/p/pickerill-samuelsamuel.pickerill@arnoldporter.comSarah Greyhttps://www.arnoldporter.com/en/people/g/grey-sarahSarah.Grey@arnoldporter.comEthan G. Shenkmanhttps://www.arnoldporter.com/en/people/s/shenkman-ethan-gethan.shenkman@arnoldporter.comState litigation over carbon capture and storage (CCS) is testing a core element in many existing statutory CCS frameworks: whether a legislature may allow nonconsenting landowners to be forced to provide their pore space for an operator&rsquo;s CCS facility through &ldquo;amalgamation&rdquo; procedures (sometimes referred to as &ldquo;unitization&rdquo; or &ldquo;pooling&rdquo;) similar to mechanisms used for the extraction of oil and gas interests. Two recent North Dakota decisions struck down the application of amalgamation to CCS, holding that forced unitization of pore space is a taking, and that the state&rsquo;s CCS statutes did not provide for &ldquo;just compensation&rdquo; under North Dakota&rsquo;s state constitution. This Advisory summarizes those rulings and the pending appeals, and assesses how similar reasoning may impact existing CCS statutes, using Louisiana and Indiana as illustrative examples, as well as the regulatory process currently underway in California to address unitization.Mon, 24 Aug 2026 00:00:00 -0500<p>State litigation over carbon capture and storage (CCS) is testing a core element in many existing statutory CCS frameworks: whether a legislature may allow nonconsenting landowners to be forced to provide their pore space for an operator&rsquo;s CCS facility through &ldquo;amalgamation&rdquo; procedures (sometimes referred to as &ldquo;unitization&rdquo; or &ldquo;pooling&rdquo;) similar to mechanisms used for the extraction of oil and gas interests. Two recent North Dakota decisions struck down the application of amalgamation to CCS, holding that forced unitization of pore space is a taking, and that the state&rsquo;s CCS statutes did not provide for &ldquo;just compensation&rdquo; under North Dakota&rsquo;s state constitution. This Advisory summarizes those rulings and the pending appeals, and assesses how similar reasoning may impact existing CCS statutes, using Louisiana and Indiana as illustrative examples, as well as the <a rel="noopener noreferrer" href="https://ww2.arb.ca.gov/resources/documents/concepts-potential-regulations" target="_blank">regulatory process currently underway in California</a> to address unitization. Drawing on learnings from these North Dakota decisions, the California rulemaking process gives project proponents an opportunity to encourage the adoption of a durable unitization mechanism that can withstand legal challenge and be reliably applied to projects in the state.</p> <h2>North Dakota Courts Hold Pore Space Amalgamation Is a Taking</h2> <p>In December 2025 and March 2026, two North Dakota district courts struck down the pore space amalgamation provisions of the state&rsquo;s CCS statute, N.D.C.C. &sect; 38-22, which had provided storage operators a mechanism to combine nonconsenting owners&rsquo; pore space interests into a storage facility unit upon a finding that they &ldquo;will be&rdquo; equitably compensated.[[N: N.D.C.C. &sect;&sect; 38-22-08(14), 38-22-10.]] They found this mechanism to be unconstitutional under the takings clause of the state constitution.[[N: <em>Swenson Living Trust v. NDIC</em>, No. 08-2025-CV-00095 (N.D. Dist. Mar. 9, 2026); <em>Northwest Landowners Ass&rsquo;n v. State</em>, No. 05-2023-CV-00065 (N.D. Dist. Dec. 2, 2025). The state takings clause is N.D. Const. art. I, &sect; 16.]]</p> <p>Both courts followed the same analytical path, drawing on federal Fifth Amendment jurisprudence. First, they held that amalgamation is a taking: landowners hold a property interest in their pore space, and the permanent physical presence of injected carbon dioxide is a per se taking under <em>Loretto v. Teleprompter Manhattan CATV Corp</em>.[[N: <em>Loretto v. Teleprompter Manhattan CATV Corp.</em>, 458 U.S. 419 (1982); <em>see Swenson</em> at &para;&para; 85, 90; <em>NWLA</em> at &para; 14.]] Under <em>Loretto</em>, a permanent physical occupation is a taking however important the public interest or slight the intrusion.[[N: <em>Loretto</em>, 458 U.S. at 434-35, 441.]] In applying Loretto, neither court considered whether carbon dioxide injected deep below the surface interfered with the landowners&rsquo; enjoyment of their land in finding a taking.</p> <p>Second, they held that the &ldquo;correlative rights doctrine&rdquo; does not reach carbon storage. That doctrine treats pooling oil and gas interests for extraction as a permissible, non-compensable regulation rather than a taking. The courts distinguished sharing a common, migrating resource (i.e., subsurface oil and gas) from injecting and storing a foreign substance in another landowner&rsquo;s pore space, warning that a contrary rule could justify forced storage of nuclear waste, industrial waste, or flood waters beneath the land of nonconsenting property owners.[[N: <em>NWLA</em> at &para; 33; <em>see Swenson</em> at &para; 101; NWLA at &para; 34. The doctrine&rsquo;s application to extraction traces to <em>Ohio Oil Co. v. Indiana</em>, 177 U.S. 190, 210 (1900).]]</p> <p>Third, they held that the statute failed to provide the &ldquo;just compensation&rdquo; the state constitution demands, on two independent grounds. First, Article I, &sect; 16, the state&rsquo;s takings clause, requires just compensation to be paid before possession, whereas the CCS statute permits amalgamation upon a finding that owners &ldquo;will be&rdquo; paid. Second, &sect; 16 requires a jury, not the commission, to determine just compensation.[[N: <em>Swenson</em> at &para;&para; 104, 114-15; <em>NWLA</em> at &para;&para; 22, 24-25.]]</p> <p>The state has appealed both rulings. In the Swenson appeal, a motion to stay awaits resolution of an attorney&rsquo;s fees issue still before the trial court. Opening briefs filed in the NWLA appeal only whether amalgamation is a taking; none of them defend the statute&rsquo;s compensation scheme.[[N: <em>See Northwest Landowners Ass&rsquo;n v. State</em>, No. 20260199 (N.D.), Dkt. Nos. 32, 35, 55, 57.]]</p> <p>The appellants in NWLA argue amalgamation is not a taking under two theories:</p> <p>First, they argue the courts should have applied <em>United States v. Causby</em> and required landowners to show &ldquo;direct and immediate interference&rdquo; with surface use, rather than <em>Loretto</em>&rsquo;s <em>per se</em> rule for physical invasions.[[N: <em>United States v. Causby</em>, 328 U.S. 256, 266 (1946).]] They point out that not every authorized intrusion is a taking. In <em>Causby</em>, the Supreme Court recognized practical limits on airspace rights to accommodate the advent of air travel, requiring landowners to show that overhead flights posed a &ldquo;direct and immediate interference&rdquo; with the enjoyment of their land before it would find a taking.&nbsp;</p> <p>Some courts, like <em>Chance v. BP Chemicals</em>, similarly treat subsurface property rights as less than absolute, requiring more than mere physical occupation to find a taking.[[N: <em>See Chance v. BP Chems., Inc.</em>, 670 N.E.2d 985, 993 (Ohio 1996); <em>see Kerns v. Chesapeake Expl., L.L.C.</em>, 762 F. App&rsquo;x 289, 297 (6th Cir. 2019).]] These courts reason that just as air travel far overhead warranted reasonable limits on air rights, injection wells too deep underground to disturb surface use warrant reasonable limits on subsurface rights. Following this reasoning, the North Dakota appellants urge the court to apply <em>Causby</em> in place of <em>Loretto</em>.</p> <p>Second, appellants argue that amalgamation is consistent with the correlative rights doctrine, a &ldquo;longstanding background restriction&rdquo; on property rights.[[N: <em>Cedar Point Nursery v. Hassid</em>, 594 U.S. 139, 160 (2021).]] The correlative rights doctrine is rooted in the state&rsquo;s police power to prevent waste of shared natural resources.[[N: <em>Ohio Oil Co. v. Indiana</em>, 177 U.S. 190, 210 (1900).]] Under the doctrine, a legislature may limit property rights in a common pool to prevent waste without effecting a taking.[[N: Id.; <em>see Cities Serv. Gas Co. v. Peerless Oil &amp; Gas Co.</em>, 340 U.S. 179, 185 (1950). On the rule of capture, <em>see Texaco Inc. v. Indus. Comm&rsquo;n of N.D.</em>, 448 N.W.2d 621, 623 n.2 (N.D. 1989).]]</p> <p>The doctrine plays a prominent role in oil and gas unitization as a limit on the &ldquo;rule of capture.&rdquo;[[N: Id.]] Under the &ldquo;rule of capture,&rdquo; a landowner does not own migratory resources, such as subsurface oil and gas, until the landowner physically takes possession of the resource (e.g. through extraction). However, unrestricted &ldquo;rule of capture&rdquo; incentivizes a wasteful drilling race for each landowner to maximize the amount of oil and gas they can claim ownership over.[[N: Id.]] To address this waste, states enacted pooling and unitization statutes to curtail individual drilling rights for the protection of the common reservoir. Courts have consistently held that the restriction of rights necessary to accomplish that pooling is an exercise of police power &mdash; not a compensable taking.[[N: Id.]]</p> <p>Appellants argue an analogous correlative rights doctrine should be applied to the use of pore space as a subsurface resource. The state trial courts in <em>NWLA</em> and <em>Swenson</em> each rejected this reasoning by distinguishing between migratory oil and gas resources, to which rule of capture applies, and stationary pore space resources, to which, they concluded, neither rule of capture &mdash; nor correlative rights doctrine as a limit to rule of capture &mdash; could apply.</p> <h2>Considerations for California&rsquo;s Rulemaking</h2> <p>Although North Dakota caselaw of course is not binding outside of that state, courts in other states may find the reasoning persuasive as some of the first cases to directly address this issue. <a rel="noopener noreferrer" href="https://cdrlaw.org/ccus-tracker/" target="_blank">This presents significant risk across the country</a> as 18 other states have enacted CCS amalgamation mechanisms similar in some respects to the now-stricken North Dakota statute. As California regulators grapple with how to design that state&rsquo;s forthcoming framework, they may consider looking to other states&rsquo; approaches to bolstering the legal durability of their rules.</p> <p>As one example, Louisiana&rsquo;s CCS unitization statute is currently facing a constitutional due process challenge in <em>Save My Louisiana, Inc. v. State</em>.[[N: <em>Save My Louisiana, Inc. v. State</em>, Case No. C-770744, La. 27th Judicial Dist. Ct..]] From 2009 to 2024 Louisiana&rsquo;s CCS statutes effectuated combination of pore space through eminent domain, subject to the state&rsquo;s general eminent domain procedures.[[N: La. R.S. 19:2.]] That scheme entitled a party to jury determination of just compensation, and required either deposit or direct payment of compensation as a condition precedent to the transfer of ownership.[[N: La. Stat. Ann. &sect;&sect; 19:4, 19:10.]] In 2024 the state shifted away from these eminent domain procedures to a new unitization framework that more closely mirrors the state&rsquo;s oil and gas unitization process.[[N: La. R.S. 30:1104.2.]] However, the statute would explicitly revert back to the prior eminent domain framework if a court finds the unitization statute unconstitutional.[[N: La. R.S. 30:1104.2(K).]] Although the current challenge takes aim at both the eminent domain and unitization frameworks, this built-in contingency plan provides a potential avenue for the state to prevail on the more established eminent domain procedures even if the Louisiana court adopts <em>NWLA</em> and <em>Swensen</em>&rsquo;s reasoning with respect to unitization.</p> <p>Another example, Indiana, utilizes a belt-and-suspenders approach to address takings risks. There, the regulatory regime predicates an amalgamation order upon a finding that the order is consistent with state authority to prevent waste, protect correlative rights, and promote efficient use of natural resources, and constitutes a public use serving the public interest.[[N:&nbsp;312 IAC &sect; 30-55-3.]] But the regulations also set forth a detailed structure for determining the equitable compensation to be provided to the landowner based on the &ldquo;weighted average of consideration paid to consenting pore space owners in the same project,&rdquo;[[N:&nbsp;312 IAC 30-5.5-4.]] while allowing nonconsenting pore space owners to submit evidence of fair market value of pore space, including an appraisal, and to contest equitable compensation amounts both at a hearing before the agency and through judicial review under the state&rsquo;s administrative appeals procedure.[[N:&nbsp;312 IAC &sect; 30-55-2; Id. &sect; 30-55-4; IC &sect; 4-21.5.]] Thus, even if a court finds that the correlative rights doctrine does not apply and amalgamation is a taking, the enumerated procedural protections for landowners help reinforce the defense that the compensation provided is consistent with the state&rsquo;s constitutional requirements.&nbsp;</p> <p>Turning to California, the state&rsquo;s skeleton CCS amalgamation statute sets forth certain minimum requirements, but leaves considerable leeway for the California Air Resources Board (CARB) to build out the details of the program.[[N: Cal. Health &amp; Safety Code &sect;&sect; 39741.1, 39741.2.]] That rulemaking is now underway with the issuance of <a rel="noopener noreferrer" href="https://ww2.arb.ca.gov/resources/documents/concepts-potential-regulations" target="_blank">Concepts for Potential Regulations</a> in May 2026. The rulemaking provides an opportunity for CARB to ensure consistency with California&rsquo;s constitutional takings clause which is among the most protective and similar to North Dakota&rsquo;s. Like North Dakota, California explicitly requires both payment before possession and a jury determination of just compensation as of right.[[N: Cal. Const. art. I, &sect; 19.]]</p> <p>Challengers may therefore argue that a North Dakota-style framework, which neither pays before possession nor guarantees a jury, is inconsistent with California&rsquo;s specific constitutional requirements. California does, however, carve out quick-take statutes in its takings clause. The state&rsquo;s constitution permits the government to take possession upon a deposit &mdash; set initially by a qualified expert, not a jury &mdash; that is promptly released to the owner, with final compensation determined later.[[N: <em>Med. Acquisition Co. v. Superior Court</em>, 228 Cal. Rptr. 3d 654, 659 (Cal. Ct. App. 2018).]] California has an opportunity to build its CCS program on that quick-take footing and to borrow from Louisiana&rsquo;s and Indiana&rsquo;s belt-and-suspenders structure. Like Indiana, regulations can ground administrative authority in the protection of correlative rights to protect against a threshold takings determination, while also affording procedural protections to landowners to support that the compensation provided is just, even if a taking occurs. Like Louisiana, CARB can also incorporate fallback provisions to explicitly invoke more established compensation procedures, such as a jury-determined process, if the amalgamation mechanism is held unconstitutional. For example, drawing from quick-take statutes, the agency could value the pore space, deposit that amount, and take possession &mdash; constitutionally deferring the jury&rsquo;s just-compensation determination while keeping projects on track, and insulating the program from constitutional challenges.&nbsp;</p> <p style="text-align: center;">* * *</p> <p>The recent court decisions in <em>NWLA</em> and <em>Swenson</em> are among the first judicial decisions to directly address the constitutionality of state CCS unitization frameworks, which have proliferated to at least 18 states. Though the decisions are only binding within North Dakota and are subject to ongoing appeals, project proponents and regulators should take notice of these courts&rsquo; reasoning when designing and implementing future regulatory frameworks to be durable and insulated from legal challenge.&nbsp;</p> <p>More detailed information on CCS state legislation is available on <a rel="noopener noreferrer" href="https://cdrlaw.org/ccus-tracker/" target="_blank">Arnold &amp; Porter&rsquo;s state-by-state CCS Tracker</a>, a collaboration with Columbia Law School&rsquo;s Sabin Center for Climate Change Law. The CCS Tracker has also recently been integrated into the <a rel="noopener noreferrer" href="http://www.carbonstorage.io/ccspolicy" target="_blank">carbonstorage.io</a> platform to provide a deeper and more comprehensive database for parties engaged in the CCS industry, including site mapping, permitting information, and economic analyses.&nbsp;</p> <p><em>* Peter Lengwin contributed to this Advisory. Peter is a summer associate in Arnold &amp; Porter&rsquo;s Washington, D.C. office.</em></p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{7D647554-5A4A-4F8E-84F1-3B66A20288A2}https://www.arnoldporter.com/en/perspectives/news/2026/08/news<p><em>Chambers Latin America</em> 2027 highlighted Arnold &amp; Porter as a &ldquo;Leading Firm&rdquo; in three practice areas and recognized six lawyers as &ldquo;Leading Individuals.&rdquo; The annual guide ranks law firms and individuals based on independent research conducted by Chambers researchers. <em>Chambers Latin America </em>covers 19 jurisdictions that span Mexico, Central America, and the Caribbean, as well as Spanish-speaking countries in South America.</p>Thu, 20 Aug 2026 00:00:00 -0500<p><em>Chambers Latin America</em> 2027 highlighted Arnold &amp; Porter as a &ldquo;Leading Firm&rdquo; in three practice areas and recognized six lawyers as &ldquo;Leading Individuals.&rdquo; The annual guide ranks law firms and individuals based on independent research conducted by Chambers researchers. <em>Chambers Latin America </em>covers 19 jurisdictions that span Mexico, Central America, and the Caribbean, as well as Spanish-speaking countries in South America.</p> <p><em>Chambers Latin America</em> ranked Arnold &amp; Porter as leading &ldquo;International Counsel&rdquo; in the following practice areas: Capital Markets, Corporate Crime &amp; Investigations, and International Arbitration. The Capital Markets team was recognized for its &ldquo;proven track record of representing sovereigns and state-owned entities in high-value debt offerings in Latin America.&rdquo; Clients praised the Corporate Crime &amp; Investigations team for its &ldquo;extensive experience and in-depth knowledge of corporate crime matters,&rdquo; describing the team as &ldquo;reliable, efficient and accurate.&rdquo; The guide also highlighted the International Arbitration group, noting its &ldquo;wealth of experience handling some of the most complex investor-state disputes in the arbitration field&rdquo; and &ldquo;unique sophistication built on well-defined, organized processes.&rdquo;</p> <p>In addition to the three practice area rankings, the following lawyers were recognized by<em> Chambers Latin America </em>2027:</p> <ul> <li>Marcus Asner&mdash;Corporate Crime &amp; Investigations</li> <li>Whitney Debevoise&mdash;Capital Markets</li> <li>Paolo Di Rosa&mdash;International Arbitration</li> <li>Patricio Gran&eacute; Labat&mdash;International Arbitration</li> <li>Gregory Harrington&mdash;Banking &amp; Finance; Capital Markets</li> <li>M&eacute;lida Hodgson&mdash;International Arbitration</li> </ul>{95FCEB15-0E11-448A-8916-5C8CD75BB7CD}https://www.arnoldporter.com/en/perspectives/news/2026/08/best-lawyers-in-america-2027-recognizes-144-arnold-porter-lawyersThe 2027 edition of<em> Best Lawyers in America</em> recognized 95 Arnold &amp; Porter lawyers as &ldquo;Best Lawyers&rdquo; across 56 practice areas. Best Lawyers is a peer-reviewed survey where lawyers cast votes on the legal capabilities of other lawyers in their practice areas.Thu, 20 Aug 2026 00:00:00 -0500<p>The 2027 edition of <em>Best Lawyers in America</em> recognized 95 Arnold &amp; Porter lawyers as &ldquo;Best Lawyers&rdquo; across 56 practice areas. Best Lawyers is a peer-reviewed survey where lawyers cast votes on the legal capabilities of other lawyers in their practice areas.</p> <p>The guide also included the &ldquo;Ones to Watch&rdquo; list, which recognizes lawyers who are less than ten years into their careers. This year&rsquo;s &ldquo;Ones to Watch&rdquo; recognized 49 Arnold &amp; Porter lawyers for their &ldquo;outstanding professional excellence in private practice.&rdquo;</p> <p><em>Best Lawyers</em> also named six Arnold &amp; Porter lawyers as &ldquo;Lawyers of the Year,&rdquo; an annual recognition presented to one &ldquo;outstanding lawyer&rdquo; per practice and metropolitan area.</p> <p>The Arnold &amp; Porter &ldquo;Lawyers of the Year&rdquo; are:</p> <ul> <li>Brian P. Dunphy&mdash;Litigation &ndash; Health Care in Boston, Massachusetts</li> <li>Rosa J. Evergreen&mdash;Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law in Washington, D.C.</li> <li>Debbie Feinstein&mdash;Antitrust Law in Washington, D.C.; Litigation &ndash; Antitrust in Washington, D.C.</li> <li>Michael D. Goodwin&mdash;Leisure and Hospitality Law in Washington, D.C.; Real Estate Law in Washington, D.C.</li> <li>Ronald R. Levine II&mdash;Mergers and Acquisitions Law in Denver, Colorado</li> <li>Jeffrey D. Talbert&mdash;Litigation &ndash; Environmental in Newark, New Jersey</li> </ul> <p>The Arnold &amp; Porter &ldquo;Best Lawyers&rdquo; are:</p> <ul> <li>Laurie Abramowitz&mdash;Tax Law</li> <li>Anand Agneshwar&mdash;Product Liability Litigation &ndash; Defendants</li> <li>Richard M. Alexander&mdash;Banking and Finance Law; Financial Services Regulation Law</li> <li>Rosemary Alito&mdash;Employment Law &ndash; Management; Litigation &ndash; Labor and Employment</li> <li>Henry D. Almond&mdash;International Trade and Finance Law</li> <li>Christopher Anderson&mdash;Health Care Law</li> <li>John P. Barker&mdash;International Trade and Finance Law</li> <li>Annette E. Becker&mdash;Corporate Law; Mergers and Acquisitions Law</li> <li>John B. Bellinger III&mdash;International Trade and Finance Law</li> <li>David Benyacar&mdash;Litigation &ndash; Intellectual Property</li> <li>Marisa Bocci&mdash;Real Estate Law</li> <li>Arthur E. Brown&mdash;Product Liability Litigation &ndash; Defendants</li> <li>Sean M. Callagy&mdash;Commercial Litigation</li> <li>Gina M. Cavalier&mdash;Health Care Law</li> <li>Maria Chedid&mdash;International Arbitration &ndash; Commercial</li> <li>Kenneth L. Chernof&mdash;Privacy and Data Security Law</li> <li>Sarah Constantine&mdash;Trusts and Estates</li> <li>James W. Cooper&mdash;Criminal Defense: White-Collar</li> <li>Frank Cruz-Alvarez&mdash;Product Liability Litigation &ndash; Defendants</li> <li>Mahnu Davar&mdash;FDA Law</li> <li>Edward A. Deibert&mdash;Mergers and Acquisitions Law</li> <li>Paolo Di Rosa&mdash;International Arbitration &ndash; Commercial; International Arbitration &ndash; Governmental</li> <li>Daniel P. DiNapoli&mdash;Biotechnology and Life Sciences Practice</li> <li>Brian P. Dunphy&mdash;Health Care Law; Litigation &ndash; Health Care</li> <li>John P. Elwood&mdash;Appellate Practice</li> <li>Rosa J. Evergreen&mdash;Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law; Litigation &ndash; Bankruptcy</li> <li>Debbie Feinstein&mdash;Antitrust Law; Litigation &ndash; Antitrust</li> <li>John M. Fietkiewicz&mdash;Criminal Defense: White-Collar</li> <li>Mark S. Filipini&mdash;Employment Law - Management; Labor Law &ndash; Management; Litigation &ndash; Labor and Employment</li> <li>Paul J. Fishman&mdash;Appellate Practice; Criminal Defense: White-Collar; Qui Tam Law</li> <li>Lynn Fischer Fox&mdash;International Trade and Finance Law</li> <li>John D. Geelan&mdash;Litigation &ndash; Labor and Employment</li> <li>Daniel M. Glassman&mdash;Commercial Litigation; Health Care Law</li> <li>Jonathan Gleklen&mdash;Antitrust Law; Litigation &ndash; Antitrust</li> <li>Stephen Gliatta&mdash;Real Estate Law</li> <li>Michael D. Goodwin&mdash;Leisure and Hospitality Law; Real Estate Law</li> <li>Joel I. Greenberg&mdash;Corporate Law; Leveraged Buyouts and Private Equity Law; Mergers and Acquisitions Law; Securities / Capital Markets Law</li> <li>Louis J. Hait&mdash;Real Estate Law</li> <li>Stacey Halliday&mdash;Environmental Law</li> <li>Jeffrey L. Handwerker&mdash;FDA Law</li> <li>Dori Hanswirth&mdash;Copyright Law; Trademark Law</li> <li>Valarie Hays&mdash;Criminal Defense: White-Collar</li> <li>Rhys W. Hefta&mdash;Real Estate Law</li> <li>James D. Herschlein&mdash;Mass Tort Litigation / Class Actions &ndash; Defendants; Product Liability Litigation &ndash; Defendants</li> <li>M&eacute;lida Hodgson&mdash;Arbitration; International Arbitration &ndash; Commercial</li> <li>Jonathan W. Hughes&mdash;Commercial Litigation</li> <li>Brian Jackson&mdash;Commercial Litigation</li> <li>Maureen R. Jeffreys&mdash;Media Law</li> <li>Giselle J. Joffre&mdash;Criminal Defense: White-Collar</li> <li>Ronald L. Johnston&mdash;Information Technology Law; Litigation &ndash; Patent</li> <li>James P. Joseph&mdash;Nonprofit / Charities Law; Tax Law</li> <li>Jeffrey H. Kapner&mdash;Real Estate Law</li> <li>Fred Kelly&mdash;Mass Tort Litigation / Class Actions &ndash; Defendants; Product Liability Litigation &ndash; Defendants</li> <li>Daniel A. Kracov&mdash;FDA Law; Health Care Law</li> <li>C. Thomas Kruse&mdash;Commercial Litigation; Litigation &ndash; Insurance</li> <li>Kari L. Larson&mdash;Real Estate Law</li> <li>Kevin J. Lavin&mdash;Corporate Law; Mergers and Acquisitions Law</li> <li>Lori B. Leskin&mdash;Mass Tort Litigation / Class Actions &ndash; Defendants; Product Liability Litigation &ndash; Defendants</li> <li>Ronald R. Levine II&mdash;Corporate Governance Law; Corporate Law; Leveraged Buyouts and Private Equity Law; Mergers and Acquisitions Law; Securities / Capital Markets Law; Venture Capital Law</li> <li>Patrick M. Madden&mdash;Employment Law &ndash; Management; Litigation &ndash; Labor and Employment</li> <li>Craig D. Margolis&mdash;Criminal Defense: White-Collar</li> <li>Karl L. Marschel&mdash;Real Estate Law</li> <li>David R. Marsh&mdash;Biotechnology and Life Sciences Practice</li> <li>Jonathan S. Martel&mdash;Environmental Law</li> <li>Michael McGill&mdash;Government Contracts</li> <li>Michael D. Messersmith&mdash;Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law</li> <li>Jeffrey A. Miller&mdash;Litigation &ndash; Intellectual Property</li> <li>Randall H. Miller&mdash;Commercial Litigation</li> <li>Saul P. Morgenstern&mdash;Antitrust Law; Litigation &ndash; Antitrust</li> <li>John N. Nassikas&mdash;Criminal Defense: White-Collar</li> <li>Brandon W. Neuschafer&mdash;Environmental Law</li> <li>Evelina J. Norwinski&mdash;Criminal Defense: White-Collar</li> <li>Todd L. Nunn&mdash;Litigation &ndash; Labor and Employment; Mass Tort Litigation / Class Actions &ndash; Defendants</li> <li>Stephanie Wright Pickett&mdash;Employment Law &ndash; Management; Litigation &ndash; Labor and Employment</li> <li>Benjamin S. Piper&mdash;Commercial Litigation</li> <li>Raqiyyah Pippins&mdash;FDA Law</li> <li>Eric S. Prezant&mdash;Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law</li> <li>Christopher J. Renk&mdash;Litigation &ndash; Intellectual Property; Litigation &ndash; Patent</li> <li>Thomas W. Richardson&mdash;Trusts and Estates</li> <li>Amy B. Rifkind&mdash;Real Estate Law</li> <li>Margaret A. Rogers&mdash;Antitrust Law</li> <li>Michael A. Rogoff&mdash;Criminal Defense: White-Collar</li> <li>Evan M. Rothstein&mdash;Litigation &ndash; Intellectual Property</li> <li>Scott B. Schreiber&mdash;Litigation &ndash; Securities</li> <li>Sean M. SeLegue&mdash;Appellate Practice; Ethics and Professional Responsibility Law</li> <li>Ethan Shenkman&mdash;Environmental Law</li> <li>Laura Shores&mdash;Antitrust Law</li> <li>Allison W. Shuren&mdash;FDA Law; Health Care Law</li> <li>Howard Sklamberg&mdash;FDA Law</li> <li>Paul W. Sweeney, Jr.&mdash;Commercial Litigation; Litigation &ndash; Labor and Employment</li> <li>Jeffrey D. Talbert&mdash;Environmental Law; Litigation &ndash; Environmental</li> <li>Eva A. Temkin&mdash;FDA Law</li> <li>Pallavi Mehta Wahi&mdash;Commercial Litigation; Litigation &ndash; Intellectual Property</li> <li>Douglas A. Winthrop&mdash;Commercial Litigation</li> <li>Pamela J. Yates&mdash;Product Liability Litigation &ndash; Defendants</li> </ul> <p>The Arnold &amp; Porter &ldquo;Ones to Watch&rdquo; are:</p> <ul> <li>Devin M. Adams&mdash;Product Liability Litigation &ndash; Defendants</li> <li>Mohamed Al-Hendy&mdash;Commercial Litigation</li> <li>Eric J. An&mdash;Corporate Law; Mergers and Acquisitions Law</li> <li>James Babounakis&mdash;Commercial Litigation; Litigation &ndash; Antitrust</li> <li>Thomas A. Bird&mdash;Intellectual Property Law; Litigation &ndash; Intellectual Property; Product Liability Litigation &ndash; Defendants</li> <li>Albert J. Boardman&mdash;Intellectual Property Law</li> <li>Devon K. Blevins&mdash;Litigation &ndash; Labor and Employment</li> <li>Adrienne D. Boyd&mdash;Commercial Litigation; Product Liability Litigation &ndash; Defendants</li> <li>Sam Callahan&mdash;Appellate Practice; Commercial Litigation</li> <li>Ai-Li Chiong-Martinson&mdash;Commercial Litigation</li> <li>Alexander Cousins&mdash;Commercial Litigation</li> <li>Benjamin G. Danieli&mdash;Intellectual Property Law</li> <li>David Denuyl&mdash;Patent Law</li> <li>Matthew R. Diton&mdash;Labor and Employment Law &ndash; Management</li> <li>Therese M. Fox&mdash;Corporate Law</li> <li>Alexander Fung&mdash;Corporate Law</li> <li>Ashley E. Gammell&mdash;Antitrust Law; Commercial Litigation</li> <li>Bridgette C. Gershoni&mdash;Intellectual Property Law; Litigation &ndash; Intellectual Property</li> <li>Brendan M. Gibbons&mdash;Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law; Commercial Litigation; Product Liability Litigation &ndash; Defendants</li> <li>Jessica D. Gilbert&mdash;Product Liability Litigation &ndash; Defendants</li> <li>Katelyn A. Horne&mdash;Commercial Litigation; Litigation &ndash; Construction</li> <li>Tommy Huynh&mdash;Product Liability Litigation &ndash; Defendants</li> <li>Kristen Proe Kendall&mdash;Commercial Litigation</li> <li>Jaclyn Machometa&mdash;Administrative / Regulatory Law; Corporate Law; Health Care Law</li> <li>Mateo Morris Lievano&mdash;Bankruptcy and Creditor Debtor Rights / Insolvency and Reorganization Law; Corporate Law</li> <li>Daniel J. O&rsquo;Brien&mdash;Real Estate Law</li> <li>Jennifer J. Oh&mdash;Criminal Defense: White-Collar</li> <li>Mark A. Patrick&mdash;Intellectual Property Law</li> <li>Thomas A. Pettit&mdash;Commercial Litigation</li> <li>Eliseo R. Puig&mdash;Commercial Litigation</li> <li>Gerard Quinn&mdash;Litigation &ndash; Antitrust</li> <li>Amanda Raines&mdash;Criminal Defense: White-Collar</li> <li>Katie Roux&mdash;Energy Law; Natural Resources Law; Oil and Gas Law</li> <li>Becca Rozen&mdash;Banking and Finance Law</li> <li>Christian Scarlett&mdash;Real Estate Law</li> <li>Michael J. Sebba&mdash;Intellectual Property Law</li> <li>Amanda J. Sherwood&mdash;Government Relations Practice</li> <li>Samantha Shulman&mdash;Antitrust Law</li> <li>Preston Smith&mdash;Commercial Litigation</li> <li>Lindsay Strong&mdash;Product Liability Litigation &ndash; Defendants</li> <li>Zachary Aaron Sweebe&mdash;Product Liability Litigation &ndash; Defendants</li> <li>Roee Talmor&mdash;Commercial Litigation</li> <li>Declan Tansey&mdash;Nonprofit / Charities Law; Tax Law</li> <li>Kelly Trout&mdash;Commercial Litigation</li> <li>Brian Williams&mdash;Appellate Practice</li> <li>Loreli Wright&mdash;Health Care Law</li> <li>Lauren S. Wulfe&mdash;Commercial Litigation</li> <li>Dylan S. Young&mdash;Antitrust Law</li> <li>William Young, Jr.&mdash;Intellectual Property Law</li> </ul>{A0C26191-0F32-4DB5-9899-64A979BF12A6}https://www.csha.info/?pg=events&evAction=showDetail&eid=351132&evSubAction=listAllMichael C. Woodhttps://www.arnoldporter.com/en/people/w/wood-michael-cmichael.wood@arnoldporter.comLoreli (Lori) Wrighthttps://www.arnoldporter.com/en/people/w/wright-loreli-loriloreli.wright@arnoldporter.comThu, 20 Aug 2026 00:00:00 -0500{9E2A3630-0B5B-432D-B788-80F16C758526}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/us-expands-cuba-sanctions-part-2-new-designations-and-wind-down-window-closing-fast-forJohn P. Barkerhttps://www.arnoldporter.com/en/people/b/barker-john-pjohn.barker@arnoldporter.comJohn B. Bellinger, IIIhttps://www.arnoldporter.com/en/people/b/bellinger-john-bjohn.bellinger@arnoldporter.comTrevor G. Schmitthttps://www.arnoldporter.com/en/people/s/schmitt-trevor-gtrevor.schmitt@arnoldporter.comIsabella F. Uríahttps://www.arnoldporter.com/en/people/u/uria-isabellaisabella.uria@arnoldporter.comBell Johnsonhttps://www.arnoldporter.com/en/people/j/johnson-bellbell.johnson@arnoldporter.comOn July 23 and August 6, 2026, the U.S. Department of State announced new sanctions targeting entities and individuals alleged to support the Cuban regime through activities in Cuba&rsquo;s energy and financial services sectors, sanctions evasion networks, overseas medical missions program, and defense sector. The designations were imposed pursuant to Executive Order (EO) 14404, Imposing Sanctions on Those Responsible for Repression in Cuba and for Threats to United States National Security and Foreign Policy, issued on May 1, 2026, which significantly expanded the U.S. government&rsquo;s sanctions authorities with respect to Cuba. As discussed in our previous Advisory, EO 14404 and the new designations demonstrate the Trump administration&rsquo;s increased willingness to leverage these authorities to target key sources of revenue and support for the Cuban regime.Thu, 20 Aug 2026 00:00:00 -0500<h2>Key Takeaways</h2> <ul> <li>On June 11, 2026, President Trump issued Executive Order 14404 (&ldquo;EO 14404&rdquo; or &ldquo;the Order&rdquo;) which expanded the scope of U.S. sanctions targeting Cuba. (<a href="/en/perspectives/advisories/2026/06/us-expands-cuba-sanctions">See our prior analysis here</a>).</li> <li><strong>What has happened since?</strong> On <a rel="noopener noreferrer" href="https://www.state.gov/releases/office-of-the-spokesperson/2026/07/additional-sanctions-designations-targeting-the-corrupt-cuban-communist-regime-and-its-financial-backers" target="_blank">July 23</a> and <a rel="noopener noreferrer" href="https://www.state.gov/releases/office-of-the-spokesperson/2026/08/targeting-enablers-of-the-cuban-regimes-arms-imports-and-foreign-military-cooperation-fact-sheet" target="_blank">August 6, 2026</a>, the U.S. Department of State designated a second wave of Cuban and foreign parties under EO 14404 &mdash; Cuba&rsquo;s energy sector, networks alleged to shield GAESA assets, the overseas medical missions program, and the defense sector and its foreign procurement channels.&nbsp;</li> <li><strong>What makes this round of designations different?</strong> Where the Order previously targeted entities based in and operating from Cuba, the latest list includes <strong>Ceiba Investments Limited</strong>, a Guernsey-based investment firm with interests in Cuban real estate. The block reaches any entity in which Ceiba holds, directly or indirectly, a 50 percent-or-greater interest &mdash; named on the SDN List or not.</li> <li><strong>What does Ceiba&rsquo;s designation mean for U.S. businesses and individuals?</strong> U.S. holders of Ceiba debt or equity face immediate restrictions. OFAC GL 2 and GL 3 provide a narrow path to compliance: they authorize winding down dealings with Ceiba and its 50 percent-or-greater-owned subsidiaries, divestment or transfer of Ceiba debt or equity holdings to non-U.S. persons, settlement of pre-designation trades, and the wind down of certain derivative contracts. New investments in Ceiba, new purchases of its debt or equity, or transfer of such interests to blocked persons are all prohibited.</li> <li><strong>The wind-down window closes August 22, 2026.</strong> Activity that cannot be completed by the deadline will require a specific license from OFAC.</li> <li><strong>Non-U.S. investors and businesses may be exposed, too.</strong> Ceiba&rsquo;s non-U.S. shareholders, lenders, joint-venture partners, and service providers are not directly bound by the new restrictions, but the State Department has warned that continued dealings may expose them to secondary sanctions under EO 14404, and to derisking by U.S. and international financial institutions.</li> <li><strong>Steps to take now.</strong> Affected businesses and investors should <ol> <li>screen counterparties, holdings, financing arrangements, and supply chains against the new designations and their majority-owned subsidiaries;&nbsp;</li> <li>map direct and indirect Ceiba exposure, including through funds, nominees, and joint ventures;&nbsp;</li> <li>decide what can be wound down or divested under GL 2 or GL 3 by August 22, 2026, and what needs a specific license;&nbsp;</li> <li>route any payment to a blocked person to a blocked interest-bearing account in the United States and file blocking and rejected-transaction reports with OFAC on time;&nbsp;</li> <li>halt prohibited activity and refresh screening lists, contractual representations, and onboarding procedures; and&nbsp;</li> <li>document relevant diligence and decisions as you go.</li> </ol> </li> </ul> <h2>New U.S. Sanctions against Cuba-linked Entities</h2> <p>On <a rel="noopener noreferrer" href="https://www.state.gov/releases/office-of-the-spokesperson/2026/07/additional-sanctions-designations-targeting-the-corrupt-cuban-communist-regime-and-its-financial-backers" target="_blank">July 23</a> and <a rel="noopener noreferrer" href="https://www.state.gov/releases/office-of-the-spokesperson/2026/08/targeting-enablers-of-the-cuban-regimes-arms-imports-and-foreign-military-cooperation-fact-sheet" target="_blank">August 6, 2026</a>, the U.S. Department of State announced new sanctions targeting entities and individuals alleged to support the Cuban regime through activities in Cuba&rsquo;s energy and financial services sectors, sanctions evasion networks, overseas medical missions program, and defense sector. The designations were imposed pursuant to Executive Order (EO) 14404, <em>Imposing Sanctions on Those Responsible for Repression in Cuba and for Threats to United States National Security and Foreign Policy</em>, issued on May 1, 2026, which significantly expanded the U.S. government&rsquo;s sanctions authorities with respect to Cuba. As discussed in our previous <a href="/en/perspectives/advisories/2026/06/us-expands-cuba-sanctions">advisory</a>, EO 14404 and the new designations demonstrate the Trump Administration&rsquo;s increased willingness to leverage these authorities to target key sources of revenue and support for the Cuban regime.</p> <p>As a result of these actions, both U.S. and non-U.S. persons should take care assessing transactions and other business operations for any involvement of one or more of the newly designated entities. Ongoing business dealings with these entities may entail substantial risks under U.S. sanctions, as described in more detail below.</p> <h2>Latest Designations</h2> <p>On July 23, 2026, the State Department designated the following entities for operating in Cuba's energy sector:</p> <ul> <li><strong>Centro de Investigaciones del Petr&oacute;leo S.A. (CEINPET)</strong>, the research and development arm of state oil company Uni&oacute;n Cuba-Petr&oacute;leo (CUPET).</li> <li><strong>Empresa de Energ&iacute;a S.A. (ENERSA)</strong>, an importer of gas, liquefied gas, and lubricants.</li> <li><strong>EINARBO S.A.</strong>, an importer of gas, liquefied gas, and lubricants.</li> </ul> <p>These designations underscore the Administration&rsquo;s focus on sectors viewed as significant sources of revenue for the Cuban government. </p> <p>On July 23, 2026, the State Department also designated entities allegedly involved in efforts to shield Cuban government assets from U.S. sanctions, particularly those associated with the military conglomerate <strong>GAESA</strong>:</p> <ul> <li><strong>Ceiba Investments Limited (Ceiba)</strong>, a Guernsey-based investment firm with interests in Cuban real estate. The State Department alleges that one of Ceiba&rsquo;s subsidiaries assumed ownership of a former GAESA joint venture following GAESA&rsquo;s designation.</li> <li><strong>Terminal de Contenedores de Mariel S.A.</strong>, the principal container terminal operator at the Port of Mariel.</li> <li><strong>Coral Mar&iacute;tima S.A.</strong>, which allegedly received ownership interests associated with the Port of Mariel through a June 2026 restructuring transaction.</li> <li><strong>Orbit S.A.</strong>, a remittance-processing company that the U.S. government alleges is controlled by GAESA.</li> </ul> <p>These actions reflect continued U.S. scrutiny of restructurings and intermediary arrangements perceived as attempts to evade existing sanctions. </p> <p>Also on July 23, 2026, the State Department targeted entities and officials associated with Cuba&rsquo;s overseas medical missions program, which the U.S. government has characterized as involving forced labor and serving as a significant source of foreign currency for the Cuban government:</p> <ul> <li><strong>Comercializadora de Servicios M&eacute;dicos Cubanos S.A. (CSMC)</strong>, the state-owned enterprise responsible for administering Cuba&rsquo;s international health services exports.</li> <li><strong>Unidad Central de Cooperaci&oacute;n M&eacute;dica (UCCM)</strong>, an agency within Cuba&rsquo;s Ministry of Public Health responsible for recruiting medical personnel for overseas assignments.</li> <li><strong>Jos&eacute; Angel Portal Miranda</strong>, Cuba&rsquo;s Minister of Public Health.</li> <li><strong>Gretza S&aacute;nchez Padr&oacute;n</strong>, Director of UCCM.</li> </ul> <p>On August 6, 2026, the State Department designated the following individuals and entities for their alleged support of Cuba&rsquo;s defense sector and foreign military procurement activities:</p> <ul> <li><strong>Empresa Cubana Importadora y Exportadora de Productos T&eacute;cnicos (TECNOIMPORT)</strong>, a GAESA subsidiary involved in importing military equipment for Cuba&rsquo;s Ministry of the Revolutionary Armed Forces (MINFAR).</li> <li><strong>Sociedad Mercantil DUNA S.A. (DUNA S.A.)</strong>, a Cuban company involved in importing military-related equipment.</li> <li><strong>Uni&oacute;n de Industria Militar (UIM)</strong>, a military holding company responsible for the production, repair, and modernization of weapons systems and military equipment.</li> <li><strong>Empresa Militar Industrial Yuri Gagarin (EMI Yuri Gagarin)</strong>, a military enterprise involved in the maintenance and repair of Cuba&rsquo;s fleet of Russian-origin aircraft.</li> <li><strong>TECNOTEX S.A. (Empresa Cubana Exportadora e Importadora de Servicios, Art&iacute;culos y Productos T&eacute;cnicos Especializados S.A.)</strong>, a GAESA subsidiary that supplies equipment, technology, and other goods to Cuba's defense and security sectors.</li> <li><strong>Roberto Jes&uacute;s Viciana Mousset</strong>, Director General of UIM and a Brigadier General in the Revolutionary Armed Forces.</li> <li><strong>Heriberto S&aacute;nchez Alleyne</strong>, an official associated with TECNOTEX.</li> <li><strong>&Aacute;lvaro Victoriano L&oacute;pez Miera</strong>, Cuba's Minister of the Revolutionary Armed Forces. Roberto Legra Sotolongo, Chief of the General Staff of the Revolutionary Armed Forces and First Deputy Minister of MINFAR.</li> <li><strong>Oscar Enrique Biosca Gallego</strong>, head of MINFAR&rsquo;s Economic Directorate.</li> <li><strong>Jos&eacute; Antonio Rem&oacute;n Rodr&iacute;guez</strong>, head of MINFAR&rsquo;s Foreign Relations Directorate.</li> <li><strong>M&oacute;nica Mili&aacute;n G&oacute;mez</strong>, Cuba&rsquo;s military attach&eacute; in Russia.</li> <li><strong>Waldo P&eacute;rez Cort&eacute;s</strong>, Cuba's military attach&eacute; in China.</li> </ul> <p>As a result of the designations, all property and interests in property of the designated persons that are in the United States or within the possession or control of U.S. persons are blocked. U.S. persons are generally prohibited from engaging in transactions or dealings involving the designated parties, as well as any entities owned, directly or indirectly, by 50 percent or more by one or more blocked persons.</p> <p>The State Department further emphasized that non-U.S. persons should exercise caution when engaging in transactions involving the newly designated parties, as such dealings may expose them to secondary sanctions or other enforcement risks under EO 14404.</p> <h2>General Licenses</h2> <p>Concurrent with the July 23 designations, the U.S. Department of the Treasury&rsquo;s Office of Foreign Assets Control (OFAC) issued General Licenses (GLs) 2, 3, and 4, providing limited authorizations intended to mitigate the immediate impact of the sanctions, particularly with respect to Ceiba and certain diplomatic activities.</p> <ul> <li><strong>GL 2</strong> <a rel="noopener noreferrer" href="https://ofac.treasury.gov/media/936436/download?inline" target="_blank">authorizes</a> transactions ordinarily incident and necessary to the wind down of transactions involving Ceiba and certain entities in which Ceiba owns, directly or indirectly, a 50 percent or greater interest by August 22, 2026, provided that any payment to a blocked person is made into a blocked interest-bearing account located in the United States.&nbsp;</li> <li><strong>GL 3</strong> <a rel="noopener noreferrer" href="https://ofac.treasury.gov/media/936621/download?inline" target="_blank">provides</a> a limited authorization for transactions involving debt, equity, and derivative contracts related to Ceiba and entities owned 50 percent or more by Ceiba. Specifically, the license authorizes transactions ordinarily incident and necessary to the divestment or transfer of Ceiba debt or equity holdings to non-U.S. persons by August 22, 2026, as well as activities necessary to facilitate, clear, and settle trades initiated before Ceiba&rsquo;s designation. The GL also authorizes the wind down of certain derivative contracts involving Ceiba or linked to Ceiba debt or equity. However, it does not authorize U.S. persons to purchase new Ceiba debt or equity, invest in Ceiba, or transfer such interests to blocked persons.</li> <li><strong>GL 4</strong> <a rel="noopener noreferrer" href="https://ofac.treasury.gov/media/936626/download?inline" target="_blank">authorizes</a> transactions involving persons blocked pursuant to EO 14404 that are ordinarily incident and necessary to the conduct of the official business of third-country diplomatic and consular missions in Cuba. The GL also authorizes certain transactions necessary to maintain accounts and process funds transfers for employees, grantees, and contractors of such missions.</li> </ul> <h2>Conclusion</h2> <p>The July and August 2026 designations illustrate the broad scope of EO 14404 and the Administration&rsquo;s willingness to deploy its authorities against an expanding range of Cuban government entities, military enterprises, government officials, and foreign commercial actors. Companies with direct or indirect exposure to Cuba should carefully assess their counterparties, investments, financing arrangements, supply chains, and other business relationships for potential links to newly designated parties or their majority-owned subsidiaries. Given the State Department&rsquo;s emphasis on secondary sanctions risk, non-U.S. companies and financial institutions should likewise conduct enhanced due diligence when engaging in Cuba-related transactions.</p> <h2>How Arnold &amp; Porter Can Help</h2> <p>Arnold &amp; Porter's <a href="/en/services/capabilities/practices/national-security/export-control-and-sanctions">Export Control &amp; Sanctions</a>&nbsp;practice advises U.S. and non-U.S. companies, investors, funds, and financial institutions facing precisely this kind of exposure.</p> <p>We help clients with exposure mapping and counterparty diligence, including tracing indirect ownership under OFAC&rsquo;s 50 percent rule; wind-downs and divestments within general license deadlines; specific license applications, guidance requests, and delisting petitions before OFAC and the State Department; blocking and rejected-transaction reports; blocked accounts and frozen assets; secondary sanctions and derisking for non-U.S. parties; contractual rights and remedies triggered by a counterparty's designation; and sanctions compliance programs. We also represent clients in OFAC enforcement inquiries, voluntary self-disclosures, and internal investigations, working alongside our corporate, funds, finance, and litigation teams when a designation occurs mid-transaction or mid-dispute.</p> <p>If you have questions about this Advisory or sanctions compliance, please contact your Arnold &amp; Porter relationship attorney or any member of our Export Control &amp; Sanctions practice.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{62D6438C-DAD8-4556-A9AD-1EF39E5056D8}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/the-occs-and-fdics-proposed-amendments-to-the-community-reinvestment-actDavid F. Freeman, Jr.https://www.arnoldporter.com/en/people/f/freeman-david-fDavid.Freeman@arnoldporter.comAnthony Raglanihttps://www.arnoldporter.com/en/people/r/raglani-anthonyanthony.raglani@arnoldporter.comKevin M. Toomeyhttps://www.arnoldporter.com/en/people/t/toomey-kevin-mkevin.toomey@arnoldporter.comKara Ramseyhttps://www.arnoldporter.com/en/people/r/ramsey-karakara.ramsey@arnoldporter.comOn July 31, 2026, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency issued a joint notice of proposed rulemaking to revise their regulations implementing the Community Reinvestment Act (CRA). This is the fourth significant rulemaking effort in less than a decade to revise some or all of the federal regulatory framework implementing the CRA, and none of the prior efforts resulted in a new framework that remains in effect today.Thu, 20 Aug 2026 00:00:00 -0500<p>On July 31, 2026, the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC) issued a joint notice of proposed rulemaking to revise their regulations implementing the Community Reinvestment Act (CRA) (the Proposed Rule).[[N: <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/08/12/2026-16454/community-reinvestment-act-regulations" target="_blank">Community Reinvestment Act Regulations</a>, 91 Fed. Reg. 52,114 (Aug. 12, 2026) (proposed rule).]] This is the fourth significant rulemaking effort in less than a decade to revise some or all of the federal regulatory framework implementing the CRA, and none of the prior efforts resulted in a new framework that remains in effect today.[[N: In 2018, the OCC issued an advanced notice of proposed rulemaking. <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2018/09/05/2018-19169/reforming-the-community-reinvestment-act-regulatory-framework" target="_blank">Reforming the Community Reinvestment Act Regulatory Framework, 83 Fed. Reg. 45,053 (Sept. 5, 2018)</a>. In 2019, the OCC and FDIC issued a notice of proposed rulemaking, finalized by the OCC alone in 2020. <em>See</em> <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2020/01/09/2019-27940/community-reinvestment-act-regulations" target="_blank">Community Reinvestment Act Regulations, 85 Fed. Reg. 1,204 (Jan. 9, 2020)</a> (proposed rule); <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2020/06/05/2020-11220/community-reinvestment-act-regulations" target="_blank">Community Reinvestment Act Regulations, 85 Fed. Reg. 34,734 (June 5, 2020)</a> (final rule). Then, in 2022, the OCC, FDIC, and Federal Reserve issued a notice of proposed rulemaking and finalized a set of CRA rules in 2023; however, those rules were enjoined in the Northern District of Texas and never went into effect. <em>See</em> <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2022/06/03/2022-10111/community-reinvestment-act" target="_blank">Community Reinvestment Act, 87 Fed. Reg. 33,884 (June 3, 2022)</a> (proposed rule); <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2024/02/01/2023-25797/community-reinvestment-act" target="_blank">Community Reinvestment Act, 89 Fed. Reg. 6,574 (Feb. 1, 2024)</a> (final rule); <em><a rel="noopener noreferrer" href="https://law.justia.com/cases/federal/district-courts/texas/txndce/2:2024cv00025/386123/75/" target="_blank">Tex. Bankers Ass'n et al. v. OCC et al.</a></em><a rel="noopener noreferrer" href="https://law.justia.com/cases/federal/district-courts/texas/txndce/2:2024cv00025/386123/75/" target="_blank">, 728 F. Supp. 3d 412 (N.D. Tex. 2024)</a> (preliminary injunction).]]</p> <p>However, the Proposed Rule is considerably more modest than the agencies&rsquo; 2023 rulemaking. Rather than redesigning the CRA from the ground up, the OCC and FDIC are proposing targeted revisions to the framework that essentially has been in place since 1995, most notably by raising asset thresholds in ways that would reduce CRA testing and reporting obligations for many banks. </p> <p>Below are five things banks should know about the Proposed Rule.</p> <h2>1. The Federal Reserve did not join the Proposed Rule, but a permanent divergence is unlikely.</h2> <p>The Federal Reserve did not join the Proposed Rule and has not publicly explained its absence. The agency is proceeding separately with respect to the agencies&rsquo; still-pending 2025 proposal to rescind the 2023 CRA rule.[[N: Proposed Rule, 91 Fed. Reg. at 52,116.]] It remains unclear whether the Federal Reserve&rsquo;s absence from the Proposed Rule reflects a preference to resolve the status of the 2023 rule before considering further CRA amendments, disagreement with particular provisions of the Proposed Rule, or a decision to take a different approach to CRA modernization. The OCC and FDIC are also seeking to resolve the litigation over the 2023 rule through a final judgment that the Federal Reserve has not joined,[[N: <em>Id.</em>]] another indication that the agencies are currently proceeding on different tracks.</p> <p>Notwithstanding the above, a final OCC/FDIC rule without corresponding Federal Reserve action would represent a significant departure from the agencies&rsquo; historically coordinated approach to the CRA&rsquo;s implementing regulations. Although regulatory and supervisory differences among the federal banking agencies are not unprecedented, we would not expect different CRA regimes to become a permanent feature of federal bank regulation. If the OCC and FDIC ultimately finalize the Proposed Rule, our expectation is that the Federal Reserve would likely take action to avoid a lasting split in the CRA standards applicable to federally supervised banks.</p> <h2>2. The Proposed Rule would substantially modify asset-based thresholds, materially reducing compliance obligations for many banks reclassified as small or intermediate banks.</h2> <p>The OCC and FDIC describe the Proposed Rule as targeted and note that much of the existing CRA architecture would remain, including the basic performance tests and the largely branch-based assessment-area framework.[[N: Proposed Rule, 91 Fed. Reg. at 52,119.]] What would change significantly is which banks are subject to which requirements. The Proposed Rule would (1) raise the small-bank threshold from less than $412 million to less than $1 billion, (2) replace the current intermediate-small-bank category with an &ldquo;intermediate bank&rdquo; category covering banks from $1 billion through $10 billion, and (3) define a &ldquo;large bank&rdquo; as a bank with more than $10 billion in assets.[[N: Proposed Rule, 91 Fed. Reg. at 52,121. Technically, the Proposed Rule will be the first time &ldquo;Large Bank&rdquo; is explicitly defined. See Proposed Rule, 91 Fed. Reg. at 52,122.]] As a result, under the Proposed Rule, nearly 80% of OCC- and FDIC-supervised banks would be treated as small banks, while only approximately 2.4% would be treated as large banks.[[N: Proposed Rule, 91 Fed. Reg. at 52,121, 52,122.]] Of note, the Proposed Rule also entertains the possibility of higher thresholds, including a &ldquo;large bank&rdquo; threshold of $30 billion[[N: Proposed Rule, 91 Fed. Reg. at 52,122-23, Question 1 (&ldquo;To better align with agency policies that establish an asset size of less than $30 billion as a threshold for certain supervisory approaches, such as being considered a community bank or being subject to the continuous examination process, should the agencies consider adjusting the intermediate bank asset size threshold to include all banks with an asset size of less than $30 billion that do not qualify as small banks? If the agencies establish $30 billion as the appropriate threshold to delineate between intermediate banks and large banks, should the agencies also adopt a larger threshold for small banks, such as the $10 billion currently proposed as the intermediate bank threshold?&rdquo;) (footnote omitted)]] that would align with recent agency policies using $30 billion as a threshold for certain community-bank supervisory approaches.&nbsp;</p> <p>Under the Proposed Rule, small banks would continue to be evaluated solely under the tailored small-bank lending test. Banks reclassified from the current intermediate-small-bank category into the small-bank category would therefore no longer be subject to the community development test. Intermediate banks would remain subject to both a tailored lending test and a tailored community development test. Only large banks would remain subject to the more comprehensive lending, investment, and service tests.[[N: Proposed Rule, 91 Fed. Reg. at 52,119.]] The Proposed Rule would also exempt small and intermediate banks from the CRA data collection, maintenance, and reporting requirements that apply to large banks.[[N: Proposed Rule, 91 Fed. Reg. at 52,147.]] For banks that would move from the large-bank category to the intermediate-bank category under the Proposed Rule, these changes could materially reduce the resources required to administer their CRA compliance programs.</p> <h2>3. The Proposed Rule would place greater emphasis on more specific lending standards &mdash; and less on deposit services &mdash; for performance evaluation purposes.</h2> <p>The Proposed Rule would make several changes to how CRA performance is evaluated. These changes generally are intended to increase the focus of the CRA performance evaluation on lending activities. Most notably, the agencies propose to narrow the retail-banking-services component of the service test to focus on credit services and the availability and distribution of retail banking facilities, rather than deposit services.[[N: Proposed Rule, 91 Fed. Reg. at 52,119.]]</p> <p>The proposal would also establish more specific standards for determining which lending products examiners evaluate. The agencies propose to limit lending-test evaluations to a bank&rsquo;s &ldquo;major product lines,&rdquo; but request comment on two methods for identifying those products: one would use bank-level loan volume and count to identify the two largest product lines; the other would permit major product lines to vary by assessment area based on both quantitative measures and factors such as the bank&rsquo;s business strategy, lending capacity, and role in meeting local credit needs.[[N: Proposed Rule, 91 Fed. Reg. at 52,123-24.]] Under either approach, consumer lending generally would be evaluated only if consumer loans constitute more than 50% of the bank&rsquo;s retail lending by both dollar volume and loan count, unless the bank elects to have consumer lending considered.[[N: Proposed Rule, 91 Fed. Reg. at 52,124.]] The agencies would establish 30 loans as presumptively sufficient to conduct a &ldquo;meaningful&rdquo; lending analysis, while preserving examiner discretion to evaluate smaller samples where appropriate.[[N: Proposed Rule, 91 Fed. Reg. at 52,125.]]</p> <p>These changes could affect not only examination methodology but also how banks allocate CRA-related resources. The OCC itself acknowledges that the proposal could shift CRA-motivated activity toward lending and credit services and away from certain community development activities &mdash; particularly grants &mdash; and away from deposit services.[[N: Proposed Rule, 91 Fed. Reg. at 52,158.]]</p> <h2>4. Community development would become more prescriptive, particularly for grants.</h2> <p>The Proposed Rule would also revise how community development activities qualify for CRA consideration and how those activities are evaluated.&nbsp;</p> <p>Among other changes, the proposal would codify a new &ldquo;responsiveness&rdquo; standard that consolidates several qualitative factors currently considered in CRA examinations &mdash; including complexity, innovativeness, flexibility, and impact &mdash; and would also consider the quality of an activity, including its success in meeting an identified credit or community development need.[[N: Proposed Rule, 91 Fed. Reg. at 52,130.]] The proposal would also establish an optional process through which banks could seek agency confirmation regarding whether particular loans, investments, grants, or services qualify for CRA consideration.[[N: Proposed Rule, 91 Fed. Reg. at 52,120.]]</p> <p>The Proposed Rule would narrow the circumstances in which community development grants receive CRA consideration. A qualifying grant generally would need to be used directly by the recipient for a program, project, or initiative with a primary purpose of community development and, subject to specified exceptions, benefit the bank&rsquo;s assessment area. In particular, large banks would generally receive CRA credit for a community development grant only if the recipient&rsquo;s indirect costs for administering the grant do not exceed 15%. Banks would also be required to document how grant proceeds are used and, for large banks, the recipient&rsquo;s indirect costs.[[N: Proposed Rule, 91 Fed. Reg. at 52,128-29.]]</p> <h2>5. Strong opposition from community groups could increase litigation risk if the Proposed Rule is finalized substantially as written.&nbsp;</h2> <p>Several community organizations have already signaled substantial opposition to the Proposed Rule.[[N: <em>See, e.g.</em>, <a rel="noopener noreferrer" href="https://ncrc.org/2026-cra-rollbacks/" target="_blank">Nat'l Cmty. Reinvestment Coal. (NCRC), The Proposed 2026 CRA Rollbacks: Key Takeaways and Why It Matters, (Aug. 3, 2026)</a>; <a rel="noopener noreferrer" href="https://nhc.org/press-release/national-housing-conference-calls-for-withdrawal-of-cra-proposal-that-would-undermine-affordable-housing-and-community-investment/" target="_blank">Nat'l Hous. Conf. (NHC), National Housing Conference Calls for Withdrawal of CRA Proposal That Would Undermine Affordable Housing and Community Investment, (July 31, 2026)</a>.]] That opposition, together with the recent history of litigation over CRA rulemakings, signals the possibility that community groups may seek to challenge any final OCC and FDIC rules that retain the Proposed Rule&rsquo;s key provisions.&nbsp;</p> <h2>Next Steps</h2> <p>Comments on the Proposed Rule are due by October 13, 2026. We expect that many banks &mdash; particularly those that would move into a less burdensome asset-based category &mdash; may consider submitting comments in support of the Proposed Rule, just as many community and consumer advocacy organizations may submit comments opposing the agencies&rsquo; approach in the Proposed Rule. The Federal Reserve&rsquo;s next steps also will be watched closely, and may have a material impact on the timing and substance of any final rule that the OCC and FDIC may pursue.</p> <p style="text-align: center;">*&nbsp; *&nbsp; *</p> <p>We will continue to review the Proposed Rule closely. Please reach out to any of the authors or your current Arnold &amp; Porter contact with any questions regarding the Proposed Rule.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{170E09D5-6925-4D1E-8BED-C95B708EEF97}https://www.law.com/therecorder/2026/08/20/california-supreme-court-rejects-duty-to-innovate-in-gilead-tenofovir-cases/Anand Agneshwarhttps://www.arnoldporter.com/en/people/a/agneshwar-anandanand.agneshwar@arnoldporter.comPaige Hester Sharpehttps://www.arnoldporter.com/en/people/s/sharpe-paige-hesterpaige.sharpe@arnoldporter.comTommy Huynhhttps://www.arnoldporter.com/en/people/h/huynh-tommytommy.huynh@arnoldporter.comJocelyn A. Wiesnerhttps://www.arnoldporter.com/en/people/w/wiesner-jocelyn-ajocelyn.wiesner@arnoldporter.comThu, 20 Aug 2026 00:00:00 -0500{1D2EA77C-1BA8-49BF-A4ED-F22AD2F495FF}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/08/amb-barbara-leaf-appears-on-cnn-to-discuss-gaza-peace-deal-negotiationsArnold &amp; Porter Senior International Policy Advisor and former U.S. Ambassador Barbara Leaf joined <em>CNN&rsquo;s</em> The Brief with Jim Sciutto to discuss the latest developments in U.S.-led negotiations toward a peace settlement in Gaza.Wed, 19 Aug 2026 00:00:00 -0500<p>Arnold &amp; Porter Senior International Policy Advisor and former U.S. Ambassador Barbara Leaf joined <em>CNN&rsquo;s</em> The Brief with Jim Sciutto to discuss the latest developments in U.S.-led negotiations toward a peace settlement in Gaza.</p> <p>Assessing the prospects for near-term progress, Amb. Leaf said Jared Kushner's involvement in recent discussions was significant, including his meeting with Hamas leader Khalil al-Hayya. However, she cautioned that the length of Kushner&rsquo;s meeting with Israeli Prime Minister Benjamin Netanyahu and differing U.S. and Israeli accounts of the talks suggest there are &ldquo;very large gaps still in any operational plan to move forward on disarmament.&rdquo;</p> <p>Amb. Leaf said that &ldquo;Hamas, for the moment, looks like it&rsquo;s cooperating,&rdquo; but noted that the true test will come when Hamas is required to hand over its weaponry, highlighting unresolved questions surrounding the scope and mechanics of disarmament. She further remarked that Netanyahu previously rejected a 15-point plan for Hamas demilitarization and has maintained that &ldquo;everything has to be done and completed&rdquo; before Israeli forces move back.</p> <p>She also discussed the political pressures facing Netanyahu ahead of Israel&rsquo;s October 27 election, commenting that he is &ldquo;working assiduously to bring his polling numbers up.&rdquo; She emphasized that Netanyahu appears to see little room for compromise on Gaza, the West Bank, or other issues involving Palestinian affairs as the election approaches.</p>{4DBDB0DD-1ED9-40F9-B49C-7BAA8CC1C0A1}https://www.arnoldporter.com/en/perspectives/news/2026/08/arnold-porter-represents-itau-unibanco-in-securing-preliminary-occ-approval-for-new-bank-in-the-usArnold &amp; Porter has advised Ita&uacute; Unibanco S.A. in securing preliminary conditional approval from the Office of the Comptroller of the Currency (OCC) to establish a new national bank in the United States. Ita&uacute; Unibanco S.A. is the largest private-sector banking institution in Brazil, and the largest bank in Latin America by market capitalization.Wed, 19 Aug 2026 00:00:00 -0500<p>Arnold &amp; Porter has advised Ita&uacute; Unibanco S.A. in securing preliminary conditional approval from the Office of the Comptroller of the Currency (OCC) to establish a new national bank in the United States. Ita&uacute; Unibanco S.A. is the largest private-sector banking institution in Brazil, and the largest bank in Latin America by market capitalization.</p> <p>The bank remains subject to additional regulatory approvals and other pre-opening requirements, including deposit insurance approval from the Federal Deposit Insurance Corporation (FDIC) and certain approvals from the Board of Governors of the Federal Reserve System, before it may commence banking operations.</p> <p>Arnold &amp; Porter advised Ita&uacute; Unibanco S.A. throughout the OCC charter application and conditional approval process, including on bank regulatory, corporate, and other legal matters associated with the formation of a <em>de novo</em> national bank in the United States.</p> <p>The Arnold &amp; Porter team was led by Financial Services partners Amber Hay and David Freeman and Corporate partner Rob Azarow, with Gregory Harrington, a partner in the firm&rsquo;s Latin America Corporate &amp; Finance practice, coordinating the firm&rsquo;s multidisciplinary representation. The team also included partners Uri Horowitz (Tax) and Anthony Raglani (Financial Services); counsel Erik Walsh (Financial Services) and Kathleen Wechter (Tax); senior associates Gregory Criscitello (Corporate &amp; Finance), Kathryn Geoffroy (Tax), and Kara Ramsey (Financial Services); associates George Eichelberger (Financial Services), Remila Jasharllari (Corporate &amp; Finance), Paul Lim (Financial Services), and Jacob Saracino (Corporate &amp; Finance); and former visiting attorney Mateus Maia de Souza*.</p> <p>Arnold &amp; Porter has extensive experience advising U.S. and international financial institutions on bank charter applications and regulatory approvals, the establishment and structuring of U.S. banking operations, and other complex matters before the OCC, Federal Reserve, FDIC, and other financial regulatory authorities.</p> <p><em>*Mateus Maia de Souza, a former visiting attorney from Brazil, assisted the team with aspects of the deal. Mr. Maia is admitted to practice law only in Brazil and is not engaged in the practice of law in any U.S. jurisdiction.</em></p>{ECAB4024-791F-4BBF-93ED-EA455849177D}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/fda-releases-proposed-pdufa-viii-commitment-letterEva Temkinhttps://www.arnoldporter.com/en/people/t/temkin-evaeva.temkin@arnoldporter.comDaniel A. Kracovhttps://www.arnoldporter.com/en/people/k/kracov-daniel-adaniel.kracov@arnoldporter.comElizabeth Trentacosthttps://www.arnoldporter.com/en/people/t/trentacost-elizabethelizabeth.trentacost@arnoldporter.comClaire W. Dennishttps://www.arnoldporter.com/en/people/d/dennis-claireclaire.dennis@arnoldporter.comOn August 14, 2026, the U.S. Food and Drug Administration (FDA) published a notice seeking public input on the proposed eighth commitment letter for the Prescription Drug User Fee Act (PDUFA VIII), which would cover fiscal years 2028 through 2032 (proposed Commitment Letter). The current PDUFA VII authorization expires in September 2027, and new legislation will be required for FDA to continue collecting prescription drug user fees after that date. FDA will hold a hybrid public meeting on September 16, 2026, and written comments are due October 16, 2026.&nbsp;Wed, 19 Aug 2026 00:00:00 -0500<p>On August 14, 2026, the U.S. Food and Drug Administration (FDA) published a notice seeking public input on the proposed eighth commitment letter for the Prescription Drug User Fee Act (PDUFA VIII), which would cover fiscal years (FY) 2028 through 2032 (proposed Commitment Letter).[[N: FDA, <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/08/14/2026-16650/reauthorization-of-the-prescription-drug-user-fee-act-public-meeting-request-for-comments" target="_blank">Reauthorization of the Prescription Drug User Fee Act; Public Meeting; Request for Comments</a>, Docket No. FDA-2026-N-8163 (Aug. 14, 2026).]] The current PDUFA VII authorization expires in September 2027, and new legislation will be required for FDA to continue collecting prescription drug user fees after that date. FDA will hold a hybrid public meeting on September 16, 2026, and written comments are due October 16, 2026. </p> <p>Assuming the letter is finalized in its current form, the draft Commitment Letter will include new enhancements, including a discretionary one-time goal date extension and additional opportunities for engagement around manufacturing deficiencies. It will carry forward certain PDUFA VII initiatives (e.g., cell and gene therapies), and will deemphasize or eliminate certain PDUFA VII initiatives (e.g., the START Pilot). The negotiated commitment letter proposes to revise review and meeting practices, transition several regulatory science initiatives into routine processes, continue to use regulatory science tools to support drug development and regulatory review, create a Chemistry, Manufacturing, and Controls (CMC) facility lifecycle program, among other notable changes for the upcoming cycle. The federal register notice announcing the proposed letter also teased certain changes in user fee structures &mdash; notably, a fee-based incentives for U.S.-based clinical trials and a new supplement fee for non-orphan indications. Key takeaways include:</p> <ul> <li><strong>Review process and communications</strong>. FDA proposes new mechanisms aimed at reducing avoidable complete response actions, missed goal dates, and review-clock extensions, including a broad third-party assessment of first-cycle review and a process for prioritizing pivotal protocols. FDA is also adding a mechanism to provide a one-time goal date extension based on post-inspection meeting responses to deficiencies identified in a pre-approval or pre-license inspection. The agency is focused on efficiency and transparency, and has made small additions to certain provisions, such as providing more context about what triggered an information request after a Late-Cycle Meeting.&nbsp;</li> <li><strong>More formalized sponsor engagement</strong>. The proposal would expand opportunities for multi-divisional meetings and create new CMC-focused engagements before and after inspection.</li> <li><strong>PDUFA VII evolution</strong>. Certain PDUFA VII initiatives will be sustained, albeit modified: e.g., a continued focus on supporting cell and gene therapy product development and review, and transitioning Model-Informed Drug Development (MIDD) and rare-disease endpoint development (RDEA) into formal pathways.</li> <li><strong>Changes to user fee setting and management</strong>. FDA proposes changes to fee-setting and resource-management mechanisms as well as application-fee, orphan, and small-business provisions that could materially affect certain sponsors. Such changes must be enacted through upcoming legislation.</li> </ul> <h2>FDA&rsquo;s Proposed PDUFA VIII Enhancements</h2> <h3>Pivotal Protocol Prioritization</h3> <p>To help sponsors obtain feedback on critical study-design questions before trial initiation, FDA proposes a process for prioritizing review of &ldquo;Pivotal Protocols.&rdquo; FDA describes these as protocols for studies intended to form the primary basis of an efficacy claim in a marketing application. A sponsor would identify the submission as a &ldquo;Pivotal Protocol&rdquo; in the cover letter, document the planned study start date, and include critical questions requiring FDA responses to enable study initiation. FDA would prioritize qualifying protocols consistent with timelines in the relevant CDER MAPP and CBER SOPP and would update those documents by the end of FY 2028.[[N: Federal Register Notice at 11-12; Proposed Commitment Letter &sect; I.J, at 18.]]</p> <h3>Meeting Management Goals</h3> <p>FDA proposes two substantive changes to formal meeting management. First, the commitment letter would expressly recognize multi-divisional meetings for products being developed under multiple investigational new drugs (INDs) across multiple therapeutic areas. A sponsor could request a multi-divisional meeting within an existing PDUFA meeting type with the goal to improve efficiency and seek alignment across participating divisions when a product raises cross-division issues.</p> <p>Second, for pre-IND, Type C, Type D, and INitial Targeted Engagement for Regulatory Advice on CBER/CDER ProducTs (INTERACT) meetings, a sponsor requesting a face-to-face format would be expected to explain why that format is warranted. If FDA concludes that a written response is sufficient, the agency would provide a specific rationale.&nbsp;</p> <p>FDA also proposes a third-party assessment of these meeting-format &ldquo;enhancements&rdquo; that would also include a list of issues regarding communications between sponsors and the agency, including best practices with respect to &ldquo;written response only&rdquo; meetings versus face-to-face. FDA would commit to revising its formal meetings guidance by September 30, 2028 to address multi-divisional meetings and written-response procedures.[[N: Federal Register Notice at 12; Proposed Commitment Letter &sect; I.K.1.f, .2.a, .9, .10.]]</p> <p>Apart from these formal meeting management goals, the proposed Commitment Letter also includes meaningful small changes for applicants that may facilitate efficiency in the review process. Of note, for information requests (IRs) issued by the review team to an applicant after a Late-Cycle Meeting, FDA intends to include a description of the issue that triggered the IR to provide context for the applicant when collecting the requested information.&nbsp;</p> <h3>Expediting Drug Development and Enhancing the Use of Regulatory Science Tools</h3> <p>FDA proposes to continue and expand the Rare Disease Endpoint Advancement (RDEA) program, transitioning from a limited pilot in FYs 2028 to 2029 to Type C-RDEA meetings in FYs 2030 to 2032. The MIDD Paired Meeting Program would similarly move toward Type C-MIDD meetings by the end of FY 2030. The Complex Innovative Design program would be incorporated into standard review practice, and FDA would continue to support sponsor engagement on real-world evidence through established formal meeting pathways.[[N:&nbsp;Federal Register Notice at 12-13; Proposed Commitment Letter &sect; I.L.3, .5, .7, at 27-36.]]</p> <h3>Regulatory Science Tools to Support Drug Development and Regulatory Review</h3> <p>The proposed Commitment Letter shifts FDA&rsquo;s regulatory-science initiatives from the pilot, demonstration, and capacity-building phases emphasized in PDUFA VII toward integration into routine review practices. The proposed text expressly provides that FDA will integrate lessons learned from prior work on benefit-risk assessment, complex innovative designs (CIDs), digital health technologies (DHTs), biomarker qualification, MIDD, patient-focused drug development (PFDD), and real-world evidence (RWE).</p> <p>The most significant change pertains to MIDD and RWE: PDUFA VIII moves away from limited-access pilot models toward routine sponsor engagement. Similarly, rather than continuing PDUFA VII&rsquo;s Advancing RWE pilot as a separate program, PDUFA VIII provides that RWE submissions will be handled through existing established review practices and ordinary formal meetings with relevant subject-matter experts. FDA also commits to continued annual reporting on RWE submissions and, where appropriate, describing the characteristics of such evidence that contributed to findings of substantial evidence of effectiveness for new indications.</p> <p>FDA also proposes to shift its PFDD focus from developing methods and infrastructure toward demonstrating how patient experience data affects actual regulatory decisions, including through case studies, a public meeting, continued training, and disclosure in review documents of patient experience data considered by FDA. The bioinformatics provisions similarly move from the initial stages in PDUFA VII to maintaining specialized expertise, computing and cloud resources, and global harmonization efforts through PDUFA VIII.&nbsp;</p> <h3>Enhancement and Modernization of the FDA Drug Safety System</h3> <p>The proposed Commitment Letter retains a performance goal under which FDA reviews and provides concurrence or comments on 90% of REMS assessment methods and protocols within 90 days of receipt. FDA would also support the Sentinel 3.0 operating model through continued investment in data infrastructure, processes, tools, and reviewer training.[[N: Federal Register Notice at 13; Proposed Commitment Letter &sect; I.M, at 37-38.]]</p> <h3>CMC and Inspections</h3> <p>PDUFA VIII proposes to continue CMC enhancements and experiences gained through PDUFA VII commitments and will continue to support FDA&rsquo;s efforts in enhancing communication during product development and application review.</p> <p>As communicated in the Federal Register notice, to support the timely development and availability of new and innovative products, FDA proposes to introduce a risk-based lifecycle approach to identifying and addressing manufacturing facility deficiencies. Both FDA and regulated industry acknowledge the criticality of CMC facility issues, and the reality that manufacturing facility deficiencies can result in Complete Response Letters (CRLs) and additional review cycles. To help prevent or mitigate these issues, or foster early resolution, the proposed Commitment Letter proposes a &ldquo;CMC facility lifecycle program.&rdquo; This program is grounded in new and enhanced engagement mechanisms between FDA and industry that may occur before, during, and after an application review cycle. The opportunity for sponsors and FDA to communicate about these issues in a formalized setting, such as the meetings highlighted below, represents a meaningful development in advancing resolution of outstanding facility issues and bringing products to market. Key elements are summarized below.</p> <ul> <li><strong>FDA Guidance</strong>. FDA will strive to publish draft guidance by October 1, 2028 describing the implementation of the CMC facility lifecycle program. It may cover topics such as readiness for a pre-approval inspection (PAI) or pre-license inspection (PLI); CMC facility pre-submission, post-PAI/PLI, and post-Action meeting procedures and associated timelines and best practices; and how to self-assess facility readiness, among other topics. The readiness criteria set forth in the guidance may facilitate eligibility for post-PAI or post-PLI meetings.</li> <li><strong>Meetings</strong>. The proposed Commitment Letter outlines several different types of meetings, as well as associated timelines and procedures. The categories of meetings are discussed below. <ul> <li><strong>CMC Facility Pre-Submission Meetings for NDAs and BLAs, Including Supplements</strong>. Applicants may request a single CMC Facility Pre-submission meeting to discuss manufacturing facilities for a proposed application submission. This meeting may occur three to six months before an application submission, though this timeframe may be flexible.<br /> These meetings may cover information about the manufacturing supply chain with a focus on the relationships and interdependence of manufacturing facilities and the operations intended for the application product, awareness and mitigation of associated risks, and information from prior inspections conducted by FDA and other regulators. This information may inform FDA&rsquo;s risk-based approach in making decisions for facility evaluations and inspections.</li> <li><strong>Post-PAI or Post-PLI Meetings for Original NDAs or BLAs</strong>. The intent of this meeting is to ensure transparency and facilitate resolution of inspection deficiencies by the application goal date. Only original applications, not supplements, are eligible for this engagement. After a PAI or PLI, FDA intends to tell the applicant when Form 483 observations may result in a CRL. The applicant may request a meeting to discuss the inspection findings that may affect application approval, their corrective actions, and whether the corrective actions are responsive to issues that may affect application approvability. Although FDA will strive to complete the meeting to facilitate first-cycle approval, the agency may extend the goal date by three months (but only one extension may be granted).</li> <li><strong>Post-Action Meetings</strong>. If deficiencies in a PAI or PLI result in FDA issuing a CRL for an NDA or BLA (including a CMC supplement), the applicant may request a Type A post-action meeting to discuss the deficiencies that should be corrected before the application can be approved.</li> </ul> </li> <li><strong>Enhanced Inspection Communications</strong>. FDA intends to communicate, at least 60 days in advance of a PAI or PLI &mdash; and no later than mid-cycle &mdash; that the agency needs to conduct an inspection when the product in the application is being manufactured. This applies to original applications, not supplements.</li> <li><strong>CMC Facility Lifecycle Workshop</strong>. FDA intends to contract with an independent third party to hold a public workshop by September 30, 2030. This workshop will focus on program implementation and its impact on facility readiness and reduction of facility deficiencies.</li> <li><strong>Third-Party Assessment</strong>. The third-party with whom FDA has contracted for the public workshop will perform an assessment involving FDA staff and sponsor interviews, will evaluate the program&rsquo;s effect on facility-issue driven CRLs, and will assess feedback from the workshop and draft a report summarizing the foregoing. FDA will publish the final report no later than nine months after the close of the public workshop comment period. Next steps may include proposed timeframes to develop or revise policy documents.</li> </ul> <h3>Advancing Next Generation Cell and Gene Therapies </h3> <p>While FDA continues to focus on the cell and gene therapy program (CGTP), the agency&rsquo;s focus is shifting from growth to maintenance. For PDUFA VIII, FDA will retain and strengthen its staff capacity and utilize existing resources to sustain the CGTP for direct review and certain supportive activities, and focus on hiring staff with specialized expertise necessary to facilitate the development and advancement of cell and gene therapies. In lieu of the various programs and targets issued for PDUFA VII, FDA staff will continue to engage in outreach and solicit views from stakeholders, participate in external collaborations, and target engagement in specific areas. For example, CBER staff will focus on developing safety and efficacy information for rare disease products, including through existing and new approaches, and will continue to advance approaches to evaluate efficacy in small patient populations. CBER will also advance sponsors leveraging their prior knowledge and public knowledge across CMC, non-clinical, and clinical spheres to support product development and application review. </p> <p>FDA will also continue to seek input regarding issues faced by cell and gene therapy product developers, including the use of novel endpoints and the role of less defined natural histories, to support the development and approval of such products. </p> <h3>Assessment of the Program, Efficacy Supplements, and Communications</h3> <p>FDA proposes a broad third-party assessment of first-cycle review processes, outcomes, and FDA-sponsor communications. Beginning in FY 2028, the assessment would examine new molecular entity (NME) New Drug Applications (NDAs) and original Biologics License Applications (BLAs) submitted during PDUFA VII and PDUFA VIII, including the timing and basis of approvals and complete responses, major amendments and clock extensions, and the completeness and timing of key communications. For efficacy supplements, the assessment would focus specifically on labeling communications. It would also evaluate communications related to pivotal protocols during development. The stated objective is to identify trends and best practices and generate actionable recommendations to help FDA and sponsors reduce avoidable complete responses, missed goal dates, and review-clock extensions.[[N: Proposed Commitment Letter &sect; I.C, at 11-12 (July 31, 2026).]]</p> <h3>Fee Mechanisms</h3> <p>Although the changes discussed herein are not covered by the proposed Commitment Letter, certain notable PDUFA VIII fee structure changes discussed in the Federal Register will be pursued through legislation. The first pertains to onshoring incentives. PDUFA VIII would update the fee structure such that sponsors would receive a 50% reduction in the application fee if the application includes clinical data from at least one phase 1 trial anchored in the United States initiated after October 1, 2027. PDUFA VIII also proposes to update the eligibility for the small business waiver to only companies based in the United States (i.e., applicants created or organized under the laws of any state).</p> <p>The second relates to orphan products. PDUFA VIII would modify the fee structure to charge sponsors a fee, equal to 50% of the full application fee, for the first supplement seeking approval for a non-orphan indication for an application that was subject to the orphan application fee exception. The orphan program fee exemption would also be limited to products approved only for orphan indications. </p> <h2>Looking Ahead</h2> <p>The pivotal-protocol process, multi-divisional meetings, and new CMC facility engagements will reward earlier identification of issues that would have otherwise resulted in CRLs. Moreover, the CMC lifecycle proposal creates additional opportunities for communication, but the usefulness of those opportunities will depend on inspection-readiness planning and the ability to respond rapidly to inspection findings.</p> <p>FDA will hold a hybrid public meeting on September 16, 2026, and written comments are due October 16, 2026. Please contact the authors of this Advisory or your regular Arnold &amp; Porter contact if you have questions or would like to discuss how this proposed PDUFA VIII commitment letter may impact your business.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{A73FB97F-B41E-4756-9D61-7388D30EF110}https://www.arnoldporter.com/en/perspectives/news/2026/08/arnold-porter-secures-precedential-tenth-circuit-victory-for-astrazeneca-in-prep-act-immunity-caseArnold &amp; Porter secured a precedential victory for AstraZeneca before the U.S. Court of Appeals for the Tenth Circuit, obtaining reversal of a district court decision in a case presenting a question of first impression regarding the scope of immunity under the Public Readiness and Emergency Preparedness (PREP) Act.Tue, 18 Aug 2026 00:00:00 -0500<p>Arnold &amp; Porter secured a precedential victory for AstraZeneca before the U.S. Court of Appeals for the Tenth Circuit, obtaining reversal of a district court decision in a case presenting a question of first impression regarding the scope of immunity under the Public Readiness and Emergency Preparedness (PREP) Act.</p> <p>In <em>Dressen v. AstraZeneca AB,</em> No. 24-4114 (10th Cir. 2026), the plaintiff, a participant in AstraZeneca's COVID-19 vaccine clinical trial, brought a breach of contract claim after the company denied her request for reimbursement of injury-related costs under her informed consent agreement. The district court held that the PREP Act's immunity provision applied only to tort claims. In a unanimous, 38-page published opinion, the Tenth Circuit reversed, holding that the statute's reference to "claims for loss" extends to contract claims and therefore bars the plaintiff's suit.</p> <p>The court also accepted the firm's collateral-order doctrine argument, concluding that immediate appellate review was appropriate because AstraZeneca's statutory immunity from suit would otherwise be irretrievably lost. The case was remanded solely to consider whether AstraZeneca contractually waived its immunity.</p> <p>The Arnold &amp; Porter team was led by partners Reeves Anderson, Arthur Brown, and Alexander Cousins, and senior associate Sam Ferenc.</p>{FEFF946D-54CC-4C0C-9F00-A6F62E0F1B50}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/08/sarah-constantine-talks-estate-planning-for-art-collectors-with-observerArnold &amp; Porter Tax partner Sarah Constantine was recently quoted in the <em>Observer</em> article, &ldquo;Estate Planning After a Lifetime of Collecting Art,&rdquo; examining how collectors and their representatives can best navigate nuanced interests and obligations when planning for the future of their collections.Tue, 18 Aug 2026 00:00:00 -0500<p>Arnold &amp; Porter Tax partner Sarah Constantine was recently quoted in the<em> Observer</em> article, &ldquo;Estate Planning After a Lifetime of Collecting Art,&rdquo; examining how collectors and their representatives can best navigate nuanced interests and obligations when planning for the future of their collections.</p> <p>Sarah emphasized that conversations with collectors and heirs are a necessary first step in determining how to proceed.</p> <p>&ldquo;You never want to force an heir to receive an asset they don&rsquo;t want,&rdquo; she said. &ldquo;If they want the asset, that&rsquo;s great. They can keep it and enjoy it. [What you don&rsquo;t want to do is] put some kind of restriction against selling it for 10 years.&rdquo;</p> <p>Sarah also highlighted that provisions like joint ownership can introduce complications.</p> <p>By splitting ownership among siblings, for example, &ldquo;you can get locked into this structure where you&rsquo;re jointly owning a very expensive property and you can&rsquo;t get out, or you&rsquo;re just not going to be able to get the liquidity out of it you would want if you want to sell and your sibling doesn&rsquo;t,&rdquo; she said.</p> <p><a href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fobserver.com%2F2026%2F08%2Fart-collectors-guide-to-passing-on-art-collection%2F&amp;data=05%7C02%7CEmma.Ruberg%40arnoldporter.com%7C2062efdc8a4d4a83371c08defd28f4d5%7Cd22d141fae37447facfa2e1d0e5b4969%7C0%7C0%7C639226549502468464%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&amp;sdata=YKg87uaCJ29bzFHobV5uFSYBbxZJBMDeaf3SKuoMV0o%3D&amp;reserved=0">Read the full article</a>.</p>{528A0722-92F2-4926-8ADC-E5E1E45AFB1F}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/division-of-corporation-finance-discontinues-responses-to-no-action-letter-requestsSara Adlerhttps://www.arnoldporter.com/en/people/a/adler-sarasara.adler@arnoldporter.comJoel I. Greenberghttps://www.arnoldporter.com/en/people/g/greenberg-joel-ijoel.greenberg@arnoldporter.comExchange Act Rule 14a-8 addresses when a company must include a shareholder&rsquo;s proposal in its proxy statement for an annual or special meeting of shareholders. In order to have a proposal included, a shareholder must be eligible and follow certain procedures set forth in the rule. Under specific circumstances enumerated in Rule 14a-8, a company is permitted to exclude a shareholder proposal, but only after submitting its reasons to the SEC. On August 14, 2026, the SEC&rsquo;s Division of Corporation Finance (Division) released an updated statement regarding its role in the Rule 14a-8 shareholder proposal process.Tue, 18 Aug 2026 00:00:00 -0500<p> <p> <p>Exchange Act Rule 14a-8 addresses when a company must include a shareholder&rsquo;s proposal in its proxy statement for an annual or special meeting of shareholders. In order to have a proposal included, a shareholder must be eligible and follow certain procedures set forth in the rule. Under specific circumstances enumerated in Rule 14a-8, a company is permitted to exclude a shareholder proposal, but only after submitting its reasons to the SEC. On August 14, 2026, the SEC&rsquo;s Division of Corporation Finance (Division) <a rel="noopener noreferrer" href="https://www.sec.gov/newsroom/speeches-statements/corpfin-statement-rule-14a-8-process-081426?utm_medium=email&amp;utm_source=govdelivery" target="_blank">released</a> an updated statement regarding its role in the Rule 14a-8 shareholder proposal process.</p> </p> <p>As described in our <a href="https://www.arnoldporter.com/en/perspectives/advisories/2025/11/sec-streamlines-process-for-excluding-shareholder-proposals" target="_self">November 2025 Advisory</a>, the Division announced that from October 1, 2025 through September 30, 2026, it would neither respond to no-action requests for, nor express views on, companies&rsquo; intended reliance on any basis for exclusion of shareholder proposals under Rule 14a-8, other than no-action requests to exclude a proposal under Rule 14a-8(i)(1).[[N:Rule 14a-8(i)(1) permits exclusion of a proposal that &ldquo;is not a proper subject for action by shareholders under the law of the jurisdiction of the company&rsquo;s organization.&rdquo;]] Companies that intended to exclude a proposal on any basis (whether under Rule 14a-8(i)(1) or otherwise), however, were still required to notify the SEC and proponents no later than 80 calendar days before filing a definitive proxy statement. In its November 2025 announcement, the Division also stated that, if a company (or its counsel) included, as part of such notification, an unqualified representation that the company had a reasonable basis to exclude the proposal based on the provisions of Rule 14a-8(i) other than Rule 14a-8(i)(1), prior published guidance, and/or judicial decisions, the Division would respond with a letter indicating that, based solely on such representation and without evaluating the adequacy of the representation or expressing a view on the basis or bases the company intends to rely on in excluding the proposal, it would not object if the company omitted the proposal from its proxy materials.</p> <p>The Division has now determined to discontinue responding to Rule 14a-8 no-action requests entirely, including those submitted under Rule 14a-8(i)(1),[[N:The updated statements notes that the Division did not receive any no-action requests to exclude a proposal under Rule 14a-8(i)(1) during the 2025-2026 proxy season.]] effective immediately. Companies will continue to be required under Rule 14a-8(j) to submit notices to the SEC and the proposing shareholder containing the information required by the rule when they intend to exclude shareholder proposals from their proxy materials,[[N:Companies should submit those notices using the online <a rel="noopener noreferrer" href="https://www.sec.gov/forms/shareholder-proposal#no-back" target="_blank">Shareholder Proposal Form</a> (the Division&rsquo;s shareholder proposal email address is no longer functional).]] but the Division will no longer respond with a letter indicating that it will not object if a company omits a proposal from its proxy materials. Companies will thus need to make decisions as to whether shareholder proposals may be excluded under Rule 14a-8(i) without the benefit of any views from the Division.</p> <p>The staff of the Division of Investment Management (DM), which is responsible for reviewing Rule 14a-8 requests related to investment companies, will take a substantially similar approach.[[N:Any notices submitted pursuant to Rule 14a-8(j) related to investment companies must be submitted by email to <a rel="noopener noreferrer" href="mailto:IMshareholderproposals@sec.gov" target="_blank">IMshareholderproposals@sec.gov</a>.]]</p> </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{3EB144A6-3543-4713-A610-3C1312816E18}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/treasury-launches-consolidated-cfius-website-with-slate-of-new-featuresJohn P. Barkerhttps://www.arnoldporter.com/en/people/b/barker-john-pjohn.barker@arnoldporter.comJohn B. Bellinger, IIIhttps://www.arnoldporter.com/en/people/b/bellinger-john-bjohn.bellinger@arnoldporter.comCharles A. Blanchardhttps://www.arnoldporter.com/en/people/b/blanchard-charles-aCharles.Blanchard@arnoldporter.comDeborah A. Curtishttps://www.arnoldporter.com/en/people/c/curtis-deborahdeborah.curtis@arnoldporter.comRonald D. Leehttps://www.arnoldporter.com/en/people/l/lee-ronald-dRonald.Lee@arnoldporter.comSoo-Mi Rheehttps://www.arnoldporter.com/en/people/r/rhee-soomisoo-mi.rhee@arnoldporter.comNicholas L. Townsendhttps://www.arnoldporter.com/en/people/t/townsend-nicholas-lnicholas.townsend@arnoldporter.comJunghyun Baekhttps://www.arnoldporter.com/en/people/b/baek-junghyunjunghyun.baek@arnoldporter.comTrevor G. Schmitthttps://www.arnoldporter.com/en/people/s/schmitt-trevor-gtrevor.schmitt@arnoldporter.comBell Johnsonhttps://www.arnoldporter.com/en/people/j/johnson-bellbell.johnson@arnoldporter.comDustin Veseyhttps://www.arnoldporter.com/en/people/v/vesey-dustindustin.vesey@arnoldporter.comOn July 29, 2026, the U.S. Department of the Treasury (Treasury), in its capacity as Chair of the Committee on Foreign Investment in the United States (CFIUS), launched a new, revamped website. The website reorganizes and consolidates CFIUS-related content that was previously dispersed across Treasury&rsquo;s general website and introduces several new guidance materials and tools designed to assist transaction parties and their advisors in understanding and navigating the CFIUS review process.Tue, 18 Aug 2026 00:00:00 -0500<p>On July 29, 2026, the U.S. Department of the Treasury (Treasury), in its capacity as Chair of the Committee on Foreign Investment in the United States (CFIUS or the Committee), launched a new, revamped website for CFIUS (<a rel="noopener noreferrer" href="https://www.cfius.gov/" target="_blank">CFIUS.gov</a>). The website reorganizes and consolidates CFIUS-related content that was previously dispersed across Treasury&rsquo;s general website and introduces several new guidance materials and tools designed to assist transaction parties and their advisors in understanding and navigating the CFIUS review process.</p> <p>Companies engaged in cross-border mergers, acquisitions, or other foreign investment activities, or U.S. real estate transactions that may implicate CFIUS jurisdiction, should familiarize themselves with the new website. By consolidating key guidance and resources in one place, the website serves as a valuable reference for transaction parties, and several of its new features &mdash; explained in more detail below &mdash; offer opportunities to engage with CFIUS earlier in the deal process. </p> <h2>Key Features of the New Website</h2> <h3>Pre-Filing Consultations Portal</h3> <p> The new website includes an online pre-filing consultation portal, available through CFIUS&rsquo; <a rel="noopener noreferrer" href="https://cfius.high.powerappsportals.us/" target="_blank">Case Management System</a>, through which transaction parties may consult with CFIUS staff before submitting a declaration or notice. The portal allows transaction parties to ask general questions about CFIUS procedures, discuss a contemplated transaction, or preview a potential filing. CFIUS continues to emphasize that it does not issue advisory opinions, including on whether a transaction constitutes a covered transaction, triggers a mandatory filing, or presents national security concerns. The portal nevertheless offers a more structured and accessible avenue for informal engagement with the Committee than was previously available. According to CFIUS, pre-filing consultations should occur at least five business days before a declaration or notice is filed.</p> <h3>CFIUS Risk Matrix</h3> <p>Any determination by the Committee to take action with respect to a transaction must be based on a risk-based analysis of the transaction&rsquo;s potential effects on U.S. national security. In conducting that analysis, CFIUS generally evaluates the transaction&rsquo;s threat, vulnerabilities, and potential consequences. Historically, however, the meaning and application of those key terms have not been publicly articulated by the Committee. The new CFIUS website provides a <a rel="noopener noreferrer" href="https://cfius.gov/files/cfius-risk-matrix.pdf" target="_blank">high-level risk matrix</a> organizing the national security risks most frequently encountered by the Committee into eight categories:</p> <ul> <li>Critical infrastructure</li> <li>Cybersecurity</li> <li>Information security</li> <li>Personal data security</li> <li>Product integrity</li> <li>Proximity concerns</li> <li>Supply assurance</li> <li>Technology transfer</li> </ul> <p>For each category, the matrix offers explanations as to what the Committee considers to be associated threats, vulnerabilities, and consequences to U.S. national security. The matrix also includes representative examples of mitigation measures that CFIUS may consider. Although the matrix is non-exhaustive, it nonetheless provides valuable insight into CFIUS&rsquo; analytical framework and may serve as a useful tool for transaction parties evaluating potential CFIUS issues, preparing filings, and anticipating mitigation discussions.</p> <h3>New Filing Process Guidance</h3> <p>The website&rsquo;s new Filing Guidance page helpfully addresses several issues that frequently create confusion for transaction parties engaging with CFIUS. First, it outlines key considerations that may inform the choice between filing a declaration and a notice, including timeline, required pre-filing preparations, filing fees, potential process outcomes, and more. For example, a declaration has a shorter assessment period, fewer information requirements, and no filing fee, but filers of a declaration may still be asked to file a full notice, which has lengthier information requirements and may demand a steep filing fee. In addition, the guidance identifies common causes of processing delays, including but not limited to the following issues:</p> <ul> <li>Filing fee clearance (since filing fees take several business days to clear, it is most efficient for parties to submit them prior to submitting the notice itself)</li> <li>Incomplete or improperly executed certifications (the guidance provides initial and final certification templates for both declarations and notices)</li> <li>Partial organizational charts (the guidance offers sample charts and chart-specific tips, such as using full legal names, ensuring economic and voting interests are clearly differentiated and labeled, and including legends, where necessary)</li> <li>Vague business descriptions (filings should clearly explain the primary products, services, and business lines of both the foreign acquirer and the U.S. business)</li> <li>Incomplete U.S. government contract matrices (matrices must provide all required information components, as described in respective declaration or notice filing materials)</li> <li>Missing annual reports (both parties in a filing must provide annual reports)</li> </ul> <p>Finally, the guidance recommends that filers consider preparing and providing certain materials that, while not expressly required by regulation, are frequently requested by CFIUS staff as part of the review process, including information about the transaction&rsquo;s history, marketing materials, recent financial information, pro forma capitalization tables, governance documents, and more. These materials further help CFIUS understand the transaction&rsquo;s potential impacts on U.S. national security; providing them alongside the initial filing can reduce the need for follow-up requests once the assessment period is underway. Taken together, these resources offer a useful roadmap for preparing a complete filing and minimizing avoidable delays.</p> <h3>Initiative Pages</h3> <p>The redesigned website also includes dedicated pages for several ongoing Treasury and CFIUS initiatives, including the developing Known Investor Program (which we previously discussed in our <a href="/en/perspectives/blogs/enforcement-edge/2025/05/treasury-announces-fast-track-pilot-program">May 2025 Blog</a>&nbsp;and <a href="/en/perspectives/advisories/2026/02/treasury-department-provides-additional-information-requests-feedback">February 2026 Advisory</a>), the Investment Security Technology Initiative, and the Strategic Vendor Program. Treasury has indicated that these pages will be updated as the initiatives continue to develop.</p> <h2>Conclusion</h2> <p>The launch of a dedicated CFIUS website represents a meaningful step toward greater transparency and accessibility in the CFIUS review process. By consolidating guidance, introducing new tools, and providing additional insight into the Committee&rsquo;s risk assessment framework, the website should help transaction parties and their advisors evaluate and address CFIUS considerations more efficiently.</p> <p>Parties contemplating a CFIUS-covered transaction should consider incorporating pre-filing engagement with CFIUS into their transaction planning. The new consultation process may provide the Committee a meaningful opportunity to flag potential issues prior to submission of a filing. Parties should also consult the risk matrix early in transaction planning, as the matrix offers valuable insight into areas of risk CFIUS may scrutinize. Early assessment of potential issues and appropriate engagement with CFIUS may reduce the likelihood of requests for additional information, prolonged review timelines, or requests to convert a declaration into a full notice.</p> <p>Finally, parties should continue to monitor the website and its published resources, as Treasury may continue to update it with additional details and guidance. Transaction parties that frequently engage with CFIUS, or expect to do so in the future, should also continue to monitor the Known Investor Program page, as the framework described in that initiative may ultimately offer eligible investors an additional avenue for streamlining future filings.</p> <p>Please contact any of the authors of this Advisory or your Arnold &amp; Porter relationship attorney with any questions about the new CFIUS website or your company&rsquo;s CFIUS-related matters.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{7C575D8E-A768-4455-9FC6-008AFB408180}https://www.americanbar.org/products/inv/book/458443484/Matthew Eaveshttps://www.arnoldporter.com/en/people/e/eaves-matthewmatthew.eaves@arnoldporter.comCara M. Kosshttps://www.arnoldporter.com/en/people/k/koss-cara-mcara.koss@arnoldporter.comMon, 17 Aug 2026 00:00:00 -0500{E97A908A-F22B-4C18-B132-E88DE5504460}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/the-icos-new-statutory-duty-to-produce-an-ai-code-of-practicejames.castro-edwards@arnoldporter.comThe UK Information Commissioner&rsquo;s Office (ICO) is developing a statutory Code of Practice (the Code) on artificial intelligence and automated decision-making that, once finalized, will shape how organizations develop, procure, and use artificial intelligence (AI) systems involving personal data. While the new regulations do not immediately impose additional obligations, the forthcoming Code &mdash; together with the ICO&rsquo;s draft guidance &mdash; signals heightened regulatory expectations for AI governance, meaningful human oversight, vendor management, and documentation. Businesses across all sectors, including those using third-party AI tools rather than building their own, should begin assessing their AI and automated decision-making practices now to prepare for future compliance and reduce regulatory, litigation, and reputational risks.Mon, 17 Aug 2026 00:00:00 -0500<p> </p> <p>All companies that are subject to the UK GDPR and develop or use artificial intelligence (AI) should begin assessing their AI and automated decision-making use now, in anticipation of the Code of Practice (the Code) that the Information Commissioner&rsquo;s Office (ICO) is required to produce, and should monitor ICO guidance and the Code as it develops to ensure compliance.</p> <p style="margin-bottom: 5pt;"><span>In short: the UK&rsquo;s data protection regulator, the ICO, is preparing a formal Code of Practice on AI and automated decision-making, and expects businesses to act well before it takes effect. This is not only a developer issue; any organization that uses AI or automated tools to make or support decisions about people, including tools bought from a third party, and that is subject to the UK GDPR, including organizations with no UK presence at all, where they offer AI-enabled goods or services to, or monitor the behavior of, individuals in the UK, should start assessing that use now. The legal detail behind this is technical, and is set out below for those who want it, but the practical message is straightforward: businesses that map, assess, and document their AI and automated decision-making use now will be considerably better placed than those that wait.</span></p> <p>On May 12, 2026, the <a rel="noopener noreferrer" href="https://www.legislation.gov.uk/uksi/2026/425/made" target="_blank">Data Protection Act 2018 (Code of Practice on Artificial Intelligence and Automated Decision-Making) Regulations 2026 (SI 2026/425)</a> (the Regulations) came into force, requiring the Information Commissioner, under section 124A of the Data Protection Act 2018 (DPA) (as inserted by section 92(2) of the Data (Use and Access) Act 2025 (DUAA)), to prepare a Code of Practice on the processing of personal data in relation to developing and using AI and automated decision-making (ADM), including a mandatory children&rsquo;s data component. The Regulations also modify the independent panel process under section 124B of the DPA (inserted by section 93 DUAA) to exclude national security matters from the panel&rsquo;s remit. For these purposes, &ldquo;automated decision-making&rdquo; is defined by reference to Article 22C(1) of the UK General Data Protection Regulation (UK GDPR) and section 50C(1) of the DPA, both also inserted by the DUAA. As we <a href="https://www.biosliceblog.com/2026/02/uks-data-use-and-access-act-what-life-sciences-companies-need-to-know/" target="_self">previously reported</a>, most of the data protection reforms introduced by the DUAA took effect on February 5, 2026. The duty on the Information Commissioner under SI 2026/425 is a separate, later development, and arguably the most significant AI-related instrument the ICO has been given to date.</p> <p>The ICO had already opened a consultation on March 31, 2026, on updated draft guidance on ADM and profiling, its first detailed reading of the ADM reforms introduced by the DUAA. That <a rel="noopener noreferrer" href="https://ico.org.uk/about-the-ico/ico-and-stakeholder-consultations/2026/03/ico-consultation-on-the-draft-guidance-about-automated-decision-making-including-profiling/" target="_blank">consultation</a> closed on May 29, 2026, and the ICO has indicated that final guidance will follow this winter, ahead of the statutory Code itself, which is not expected to take effect until 2027. For businesses that build AI models, this is a familiar story. For businesses that simply use AI tools bought or licensed from someone else, it is less well understood and, in our experience, considerably more likely to be overlooked.</p> <h2>Background</h2> <p>SI 2026/425 does not itself impose new obligations on businesses. It gives effect to the duty on the Information Commissioner, under section 124A DPA, to prepare the Code, and modifies the section 124B independent panel process to exclude national security matters from its remit before the Code is laid before Parliament. Section 50C DPA and Article 22C UK GDPR, both inserted by the DUAA, are referenced only to define &ldquo;automated decision-making&rdquo; for the purposes of the Regulations; they are not themselves the source of the duty. Once finalized, the Code is expected to carry the same statutory weight as the existing Children&rsquo;s Code and Data Sharing Code: courts must take it into account in relevant proceedings, and the ICO must have regard to it in enforcement decisions. That is a materially different order of obligation from non-binding guidance.</p> <p>In the meantime, the ICO&rsquo;s draft ADM guidance, though not yet final and not itself the statutory Code, is the clearest available signal of the ICO&rsquo;s thinking, including on what will count as &ldquo;meaningful human involvement&rdquo; in an automated decision (active review before a decision takes effect, not a token sign-off) and on the documentation the ICO will expect organizations to hold.</p> <h2>Who Does This Affect?</h2> <p> <p><span>This is not limited to UK-based companies: it includes organizations with no UK presence at all, where they offer AI-enabled goods or services to, or monitor the behavior of, individuals in the UK.&nbsp;</span>A common misconception is that AI regulation is primarily a problem for the businesses that build AI models. It is not. The ICO&rsquo;s ADM rules attach to the controller that uses an automated or AI-assisted output to make a decision about an individual, regardless of who built the underlying tool. Buying or licensing a third-party AI system does not transfer that responsibility to the vendor. In practice, this reaches:</p> </p> <ul> <li><strong>Recruitment and HR functions</strong> using AI-assisted CV screening, candidate ranking, or recruitment platforms</li> <li><strong>Financial services and insurance businesses</strong> using AI or automated systems for credit decisions, pricing, or fraud and risk scoring</li> <li><strong>Customer-facing businesses</strong> using AI chatbots or automated triage tools that affect service outcomes, refunds, or complaint handling</li> <li><strong>Life sciences and healthcare organizations</strong> using AI to prioritize, triage, or flag patient cases</li> <li><strong>Any business</strong> procuring third-party AI tools in the ordinary course of vendor and supplier assessment</li> </ul> <p>The ICO&rsquo;s own research, published in its <a rel="noopener noreferrer" href="https://ico.org.uk/about-the-ico/what-we-do/recruitment-rewired/" target="_blank">Recruitment Rewired report</a> alongside its draft ADM guidance, found that many employers relying on automated recruitment tools were likely conducting solely automated decision-making, without meaningful human involvement and without adequately telling candidates so, in circumstances where several were not aware, or did not acknowledge, that this was what they were doing. The obligation can therefore apply even where a business regards itself as simply using a tool, rather than deploying AI.</p> <h2>The Risks of Non-Compliance</h2> <ul> <li><strong>Regulatory enforcement</strong>. Enforcement for ADM or AI-related breaches sits within the existing UK GDPR penalty regime, fines of up to the higher of &pound;17.5 million or 4% of global annual turnover. Once finalized, the Code is likely to become the benchmark the ICO uses to assess what &ldquo;good practice&rdquo; looks like.</li> <li><strong>Individual rights and litigation risk</strong>. Individuals affected by an automated decision have rights to be informed, to obtain meaningful human review, and to challenge the outcome. Unmanaged AI or ADM use is accordingly a direct source of individual complaints, and potentially litigation.</li> <li><strong>Priority-sector scrutiny</strong>. The ICO&rsquo;s AI and biometrics strategy names three priority areas: <a rel="noopener noreferrer" href="https://ico.org.uk/about-the-ico/our-information/our-strategies-and-plans/artificial-intelligence-and-biometrics-strategy/where-we-will-focus/" target="_blank">foundation model development, ADM in recruitment and public services, and police use of facial recognition technology</a>, meaning these areas are more likely to attract proactive regulatory attention rather than only complaint-driven investigation. Agentic AI sits outside these three formal priorities for now, but the ICO has flagged it as an emerging area and dedicated guidance is expected as part of its 2026/27 work program. </li> <li><strong>Vendor and procurement risk</strong>. AI-specific contractual terms, covering training-data rights, model updates, output ownership, and sub-processing, are increasingly expected in due diligence, but are not yet standard in many existing supplier agreements.</li> <li><strong>Reputational exposure</strong>. Unmanaged AI use is increasingly treated as a board-level issue, and being seen to react only after a complaint or investigation is materially worse, from a regulatory and reputational perspective, than being able to demonstrate a documented, proactive governance process.</li> </ul> <h2>What Should Businesses Do Now?</h2> <ol> <li>Map AI and ADM use across the organization, including tools procured from third-party vendors, not only internally developed systems.</li> <li>Review, or create, Data Protection Impact Assessments where AI or ADM use is likely to result in high risk to individuals, in line with the ICO&rsquo;s draft guidance, with particular attention to the &ldquo;meaningful human involvement&rdquo; test.</li> <li>Audit vendor and procurement contracts for AI-specific terms, including training-data rights, model updates, and output ownership.</li> <li>Benchmark AI use in recruitment, financial decision-making, and any context involving children&rsquo;s data against the ICO&rsquo;s stated priority areas.</li> <li>Monitor for the ICO&rsquo;s final ADM guidance, expected this summer, and the statutory Code itself, expected in 2027, and revisit governance documentation once each is published.</li> </ol> <h2>Conclusion</h2> <p>SI 2026/425 is, on its face, a narrow procedural instrument: a duty on the Information Commissioner to produce a Code, not a new set of obligations on business. In practice, it is a foundational step toward the most significant AI-specific instrument the ICO will have produced, and the draft ADM guidance already gives a reasonably clear preview of its likely direction. Businesses that treat AI governance as a developer problem, rather than a deployer problem, risk being caught out when the Code and the enforcement expectations that come with it take effect. Those who map, assess, and document their AI and ADM use now will be considerably better placed than those who wait.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{FDA01DD0-FBF4-4CB1-B629-B76769505C84}https://www.pli.edu/programs/fitting-new-tech-into-the-attorney-client-privilege-and-work-product-protection/468814melissa.weberman@arnoldporter.comMon, 17 Aug 2026 00:00:00 -0500{AE5BDDA0-E5F8-4001-AA57-7232F9177833}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/08/associated-press-quotes-lori-leskin-on-consumer-tariff-refund-litigationLori Leskin, Co-Chair of Arnold &amp; Porter&rsquo;s Consumer Products practice, was quoted by the <em>Associated Press</em> article, &ldquo;A surprise credit after an overseas purchase: The tariff refunds now flowing through shippers,&rdquo; which examines the status of refunds following the U.S. Supreme Court's decision earlier this year striking down tariffs imposed under the International Emergency Economic Powers Act, as well as the wave of consumer class actions seeking refunds from retailers who presumably are now receiving the IEEPA refunds.Thu, 13 Aug 2026 00:00:00 -0500<p>Lori Leskin, Co-Chair of Arnold &amp; Porter&rsquo;s Consumer Products practice, was quoted by the <em>Associated Press</em> article, &ldquo;A surprise credit after an overseas purchase: The tariff refunds now flowing through shippers,&rdquo; which examines the status of refunds following the U.S. Supreme Court's decision earlier this year striking down tariffs imposed under the International Emergency Economic Powers Act, as well as the wave of consumer class actions seeking refunds from retailers who presumably are now receiving the IEEPA refunds.</p> <p>The article details how shippers and retailers are handling billions of dollars in tariff refunds and the extent to which consumers may ultimately recover amounts they paid directly or indirectly.</p> <p>With regard to the majority of the consumer class actions filed against manufacturers and retailers, Lori explained that consumers bringing these cases may face significant challenges proving that higher prices were directly attributable to tariffs. &ldquo;It&rsquo;s going to be very hard for anyone to establish that the price increase they paid was due to tariffs and not some other market force,&rdquo; she said. She added that many of the lawsuits focus broadly on price increases, but &ldquo;to be able to trace a price increase due to a single factor is going to be really difficult given the multifactorial approach that most companies take.&rdquo;</p> <p><a href="https://apnews.com/article/tariff-refund-shipping-retail-d4162f466eb83aa97e430a86221ad226">Read the full article</a>.</p>{F759E9CD-B684-434F-8165-7D0A5EA25813}https://www.arnoldporter.com/en/perspectives/news/2026/08/bti-consulting-group-names-four-arnold-porter-attorneys-2026-bti-client-service-all-starsBTI Consulting Group (BTI) recently named four Arnold &amp; Porter attorneys to its 2026 list of Client Service All-Stars.&nbsp;Thu, 13 Aug 2026 00:00:00 -0500<p>BTI Consulting Group (BTI) recently named four Arnold &amp; Porter attorneys to its 2026 list of Client Service All-Stars. The 25th annual edition of the list is the &ldquo;gold standard&rdquo; for identifying attorneys &ldquo;delivering the best of the best client service.&rdquo; The results are based on more than 350 in-depth, independent interviews with top legal decision makers at the world&rsquo;s most demanding clients as part of BTI&rsquo;s ongoing Annual Survey of General Counsel.</p> <p>The following Arnold &amp; Porter attorneys were included in BTI&rsquo;s 2026 list:</p> <ul> <li>Joe Farris, Partner, Commercial Litigation and Intellectual Property (San Francisco)</li> <li>John Freedman, Senior Pro Bono Counsel (Washington, D.C.)</li> <li>Leah Motzkin, Associate, Commercial Litigation and White Collar Defense &amp; Investigations (Los Angeles)</li> <li>Soo-Mi Rhee, Partner, White Collar Defense &amp; Investigations and Anti-Corruption (Washington, D.C.)</li> </ul> <p>Partner Joe Farris is a trial attorney and trusted advisor to technology companies facing high-stakes litigation, with a focus on the novel legal questions reshaping the technology industry.</p> <p>Senior Pro Bono Counsel John Freedman devotes his practice to litigating significant civil rights matters in trial and appellate courts.</p> <p>Associate Leah Motzkin focuses her practice on complex commercial litigation and White Collar Defense &amp; Investigations.</p> <p>Partner Soo-Mi Rhee, who leads the firm&rsquo;s Anti-Corruption practice, offers extensive experience in major anti-corruption, compliance, national security, export controls, and sanctions issues, with particular expertise in high-tech industries.</p>{92A198FC-03E7-4BD4-B32C-0B0C62BF010F}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/fda-proposes-mandatory-gras-notification-requirementHoward Sklamberghttps://www.arnoldporter.com/en/people/s/sklamberg-howardhoward.sklamberg@arnoldporter.comRaqiyyah Pippinshttps://www.arnoldporter.com/en/people/p/pippins-raqiyyahraqiyyah.pippins@arnoldporter.comBrandon W. Neuschaferhttps://www.arnoldporter.com/en/people/n/neuschafer-brandon-wbrandon.neuschafer@arnoldporter.comDaniel A. Kracovhttps://www.arnoldporter.com/en/people/k/kracov-daniel-adaniel.kracov@arnoldporter.comAda Ohanenyehttps://www.arnoldporter.com/en/people/o/ohanenye-adaada.ohanenye@arnoldporter.comOn August 11, 2026, the U.S. Food and Drug Administration (FDA) published a proposed rule that would convert the currently voluntary Generally Recognized as Safe (GRAS) notification program into a mandatory requirement. If finalized, any person who introduces a substance into interstate commerce based on self-determined GRAS status would be required to notify FDA of the GRAS determination and provide supporting documentation. The notification requirement would apply to products currently on the market as well as products introduced in the future.Thu, 13 Aug 2026 00:00:00 -0500<h2>Introduction</h2> <p>On August 11, 2026, the U.S. Food and Drug Administration (FDA) <a rel="noopener noreferrer" href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.federalregister.gov%2Fdocuments%2F2026%2F08%2F11%2F2026-16296%2Fsubstances-generally-recognized-as-safe&amp;data=05%7C02%7CTheresa.Denson%40arnoldporter.com%7C9abc835c519b42ea3a1008def93e2793%7Cd22d141fae37447facfa2e1d0e5b4969%7C0%7C0%7C639222242548567888%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&amp;sdata=SKI3lVA5YYKRlG2ynSfzEV3Q9A%2BEa0BnTVp3q2cegts%3D&amp;reserved=0" target="_blank">published a proposed rule</a> that would convert the currently voluntary Generally Recognized as Safe (GRAS) notification program into a mandatory requirement. If finalized, any person who introduces a substance into interstate commerce based on self-determined GRAS status would be required to notify FDA of the GRAS determination and provide supporting documentation. The notification requirement would apply to products currently on the market as well as products introduced in the future.</p> <p>Critically, this is a notification requirement, not a premarket approval requirement. Companies would be able to continue marketing GRAS substances without waiting for any FDA response to a notification. However, as discussed below, the practical implications of this rule are significant and industry participants should carefully evaluate their GRAS portfolios and plans now.</p> <p>Comments on the proposed rule are due by December 9, 2026.</p> <h2>Background</h2> <p>Under the Federal Food, Drug, and Cosmetic Act (FD&amp;C Act), a food additive is deemed &ldquo;unsafe&rdquo; unless it conforms to a regulation prescribing conditions for its safe use or is exempt from the definition of a food additive because it is GRAS.[[N: 21 U.S.C. &sect;&sect; 321(s), 348(a).]] GRAS substances that are generally recognized among qualified experts as having been adequately shown to be safe under the conditions of their intended use have historically occupied a unique regulatory space, given they can be marketed for use in food without prior FDA approval.</p> <p>Since 1997, FDA has maintained a voluntary GRAS notification program, which was finalized in 2016. Under this system, a company may independently determine that a substance is GRAS and market it without notifying FDA. If a company chooses to submit a GRAS notice, FDA evaluates the notice and responds with one of three outcomes: (1) by indicating that it does not question the basis for the GRAS conclusion; (2) stating that the notice does not provide a sufficient basis for a GRAS determination; or (3) indicating that the agency granted a request by the notifier to cease its evaluation of the GRAS notice.[[N: U.S. Food &amp; Drug Admin., <a rel="noopener noreferrer" href="https://www.fda.gov/food/generally-recognized-safe-gras/about-gras-notification-program" target="_blank">About the GRAS Notification Program</a> (Oct. 2016).]]</p> <p>Since 1998, FDA has formally filed over 1,200 GRAS notices.[[N: 91 Fed. Reg. 51834, 51840 (Aug. 11, 2026).]] However, FDA estimates that 1,000 or more additional substances are marketed for use in human food based on independent GRAS conclusions without FDA notifications.[[N: <em>Id.</em> at 51840.]] This gap has drawn increasing regulatory and public scrutiny. On March 10, 2025, Health and Human Services Secretary Robert F. Kennedy Jr. directed FDA to explore rulemaking to eliminate the pathway for firms to introduce purported GRAS substances without notifying FDA. The proposed rule aligns with the administration&rsquo;s &ldquo;Make America Healthy Again&rdquo; initiative and responds to several high-profile incidents that highlighted the risks of the current voluntary system.</p> <p>For example, in 2022, tara flour &mdash; a food ingredient marketed under a self-determined GRAS conclusion &mdash; was associated with approximately 400 adverse event reports, yet FDA had never received a GRAS notice for the substance.[[N: 91 Fed. Reg. 51834, 51841 (Aug. 11, 2026); see also U.S. Food and Drug Administration, <a rel="noopener noreferrer" href="https://www.hfpappexternal.fda.gov/scripts/fdcc/index.cfm?set=Postmarket&amp;id=taraflour&amp;sort=%20Sortterm_ID&amp;order=ASC&amp;startrow=1&amp;type=basic&amp;search=tara%20flour" target="_blank">Post-Market Determinations That the Use of a Substance Is Not GRAS: Tara Flour</a> (Apr. 10, 2024).]] Similarly, FDA took enforcement action against caffeinated alcoholic beverages that were alleged to be GRAS.[[N: U.S. Food &amp; Drug Admin., <a rel="noopener noreferrer" href="https://www.fda.gov/food/food-additives-petitions/caffeinated-alcoholic-beverages" target="_blank">Caffeinated Alcoholic Beverages</a> (Nov. 17, 2010).]] Further, FDA has taken enforcement action against delta-8 THC-containing food products, stating that the agency was unaware of a basis to conclude that delta-8 THC is GRAS for use in conventional foods.[[N: U.S. Food &amp; Drug Admin., FDA, <a rel="noopener noreferrer" href="https://www.fda.gov/news-events/press-announcements/fda-ftc-continue-joint-effort-protect-consumers-against-companies-illegally-selling-copycat-delta-8" target="_blank">FTC Continue Joint Effort to Protect Consumers Against Companies Illegally Selling Copycat Delta-8 THC Food Products</a> (July 16, 2024).]]</p> <h2>Summary of the Proposed Rule&rsquo;s Major Provisions</h2> <h3>1. Mandatory GRAS Notification</h3> <p>Under proposed &sect; 170.205(a), any person introducing a substance into interstate commerce under the GRAS provision of section 201(s) of the FD&amp;C Act must notify FDA of the basis for the GRAS conclusion.[[N: 91 Fed. Reg. 51834, 51876 (Aug. 11, 2026).]] The requirement applies to substances in both conventional food (human food ingredients) and food contact substances (e.g., food packaging materials). </p> <p>The notification requirement would be considered satisfied upon FDA&rsquo;s filing of the submission, not upon mere submission.[[N: <em>Id.</em> at 51877.]] FDA would have 45 days to determine whether to file a submitted notice.[[N: <em>Id.</em>]] However, this filing determination is limited to completeness. FDA&rsquo;s substantive evaluation of the GRAS conclusion would occur afterward and could result in a &ldquo;no questions&rdquo; letter, an insufficient-basis letter, or a &ldquo;cease to evaluate&rdquo; letter.[[N: <em>Id.</em> at 51837.]] None of these outcomes is a formal premarket approval or denial, and the proposed rule would not require a company to await FDA&rsquo;s substantive response before marketing a substance under a GRAS conclusion.[[N: <em>Id.</em> at 51851.]] Because filed notices and FDA response letters would generally be publicly available, however, companies may face greater practical exposure following an adverse FDA response. A submission that FDA does not file would not satisfy the notification requirement. Further, FDA has proposed to consider noncompliance with that requirement when prioritizing substances for post-market review.[[N: <em>Id.</em> at 51851.]]</p> <h3>2. Exceptions From Mandatory Notification</h3> <p>Proposed &sect; 170.205(b) would provide exceptions from the mandatory notification requirement for:</p> <ol> <li>Substances already covered by an existing &ldquo;no questions&rdquo; letter from FDA</li> <li>Substances listed or affirmed as GRAS in 21 CFR Parts 182, 184, or 186</li> <li>Substances considered GRAS under &sect; 170.30(d) (natural biological origin, widely consumed before 1958) or &sect; 170.30(i)(1)</li> <li>Substances considered through an established FDA process (e.g., Voluntary Premarket Consultations, Animal Cell Culture Consultations) where no need for a GRAS notice was identified</li> <li>Substances subject to a Threshold of Regulation (TOR) exemption under &sect; 170.39</li> <li>Substances covered by an effective Food Contact Notification (FCN), limited to the manufacturer/supplier listed in the FCN</li> <li>Substances for which a streamlined submission has been included on FDA&rsquo;s public list (a time-limited transitional option, discussed below)</li> </ol> <p>Notably, while the GRAS mandatory notification requirement bears some resemblance to the process for new dietary ingredients intended for use in dietary supplements, the two frameworks differ in important ways, and companies should not assume that a favorable GRAS conclusion for conventional food also resolves NDIN status for the same substance used in a dietary supplement, or vice versa. The two pathways have distinct statutory triggers and procedural requirements, and each use must be evaluated on its own terms.</p> <h3>3. Time-Limited Streamlined Submission Option</h3> <p>Recognizing that many substances are already marketed under self-determined GRAS conclusions, the proposed rule includes a time-limited streamlined submission option in proposed Subpart F, &sect; 170.305. This option would create an exception from the GRAS notice submission requirement if certain information about the conditions of use of the substance is submitted to FDA and the submission is included on a public list maintained by FDA, unless FDA issues a determination that a GRAS notice or a food additive petition must be submitted for the intended use of a substance.</p> <p>This transitional pathway would apply only to substances already in interstate commerce before the effective date of the final rule, and submissions must be made within one year after that effective date.[[N: <em>Id.</em> at 51856.]] The information required for submission must include (1) the submitter&rsquo;s name and address; (2) the substance name; (3) intended conditions of use; (4) evidence that the substance was in interstate commerce before the effective date; and (5) if applicable, where FDA sent a cease to evaluate letter in response to a notifier&rsquo;s previous GRAS notice (GRN or AGRN), provide that file number (GRN No. or AGRN No.) as part of the submission.[[N: <em>Id.</em> at 51869.]]</p> <p>The streamlined option is not available for substances that have received an &ldquo;insufficient basis&rdquo; letter or a &ldquo;not GRAS&rdquo; determination from FDA.[[N: <em>Id.</em> at 51880.]] FDA will post qualifying submissions on a public list, but may subsequently ask questions or determine that a full GRAS notice or food additive petition is required.[[N: <em>Id.</em> at 51880-51881.]]</p> <p>The proposed notification requirement applies to &ldquo;any person introducing a substance into interstate commerce&rdquo; under the GRAS provision.[[N: <em>Id.</em> at 51876.]] The preamble further explains that &ldquo;[a]ny person could rely&rdquo; on inclusion of a streamlined submission on FDA&rsquo;s public list &ldquo;for the same conditions of use&rdquo; of a substance.[[N: <em>Id.</em> at 51855.]] Thus, a downstream food manufacturer may be able to rely on a qualifying streamlined submission where it covers the same substance and conditions of use; the proposal does not require each manufacturer using that substance to submit separately. Similarly, an existing &ldquo;no questions&rdquo; letter may excuse a new GRAS notice if it covers the substance under the same conditions of use.[[N: <em>Id.</em> at 51876.]] Companies should nevertheless confirm that their ingredient is materially the same as the ingredient covered by the submission or letter. FDA cautions that differences in identity, manufacturing process, specifications, or conditions of use may mean that an earlier GRAS conclusion does not apply, in which case a separate GRAS analysis and potentially a new notice may be necessary.[[N: <em>Id.</em> at 51851.]]</p> <p>Although the proposal does not prescribe which supply-chain participant must make a submission, it is likely that ingredient manufacturers or suppliers will often be best positioned to prepare and maintain the underlying GRAS support. Downstream food manufacturers, however, should not assume that a supplier&rsquo;s submission automatically covers their products. They should confirm that any applicable streamlined submission or &ldquo;no questions&rdquo; letter covers the ingredient as manufactured and the relevant conditions of use in their finished foods. Companies may also wish to address these issues in supplier diligence and contractual arrangements, including responsibility for maintaining GRAS support and providing notice of any material changes to the ingredient, its manufacturing process, or its intended uses. </p> <h3>4. Electronic Submission and English Translation Requirements</h3> <p>The proposed rule would require that all GRAS notices be submitted electronically through FDA&rsquo;s Collaboration, Submission, and Messaging (COSM) system.[[N: <em>Id.</em> at 51876.]] A waiver process would be available for filers unable to submit electronically.[[N: <em>Id.</em> at 51849.]] Additionally, all foreign language materials included in a submission would need to be accompanied by an English translation.[[N: <em>Id.</em> at 51879.]]</p> <h3>5. Revised FDA Review Timelines</h3> <p>Under the proposed rule, upon receipt of a submission, FDA will conduct an initial evaluation to determine whether to file it as a GRAS notice and will inform the submitter of the filing decision within two business days.[[N: <em>Id.</em> at 51877.]] Once filed, FDA will respond to the submitter within 180 days of filing based on its evaluation of the notice, with the possibility of up to two 90-day extensions (increased from one extension under the current program).[[N: <em>Id.</em>]] FDA will inform a notifier in writing of this second extension as soon as practicable, but no later than the end of the initial 90-day extension.[[N: <em>Id.</em> at 51854.]]</p> <h3>6. Expansion of Threshold of Regulation (TOR) Exemption</h3> <p>The proposed rule would expand the TOR exemption program to include substances used in food generally, not just food contact articles.[[N: <em>Id.</em> at 51846.]] Thus, if a food-contact or processing substance already qualifies for a TOR exemption (i.e., where dietary migration is less than 0.5 ppb and poses negligible health risk), a company does not need to submit a separate mandatory GRAS notice for that use.</p> <h3>7. FOIA and Confidentiality Clarifications</h3> <p>The proposed rule clarifies that data and information not identified by the submitter as exempt from disclosure under the Freedom of Information Act will be considered non-exempt from public disclosure.[[N: <em>Id.</em> at 51876.]] Submitters should carefully designate confidential commercial information at the time of submission.</p> <h3>8. Animal Food Provisions</h3> <p>The proposed rule further includes parallel provisions in Part 570 for animal food, mirroring the Part 170 requirements for human food with appropriate modifications.[[N: <em>Id.</em> at 51862.]] Notably, the animal food provisions include an exception for ingredients listed by the Association of American Feed Control Officials.[[N: <em>Id.</em> at 51866.]]</p> <h2>Key Timelines and Compliance Dates</h2> <p>If the rule is finalized as proposed, the following timeline would apply:</p> <ul> <li><strong>Comment Period</strong>: 120 days, currently ending December 9, 2026</li> <li><strong>Effective Date</strong>: 60 days after publication of the final rule</li> <li><strong>Compliance Date for Mandatory Notification</strong>: 18 months after the effective date</li> <li><strong>Streamlined Submission Window</strong>: One year from the effective date</li> </ul> <p>FDA estimates the present value of costs associated with the proposed rule at approximately $89.6 million with a lower bound of $34.9 million ad an upper bound of $210.0 million, discounted at a 3% discount rate over 10 years, with annualized costs of approximately $10.5 million.[[N: <em>Id.</em> at 51836.]] The agency acknowledges that the rule may have a significant economic impact on small entities.[[N: <em>Id.</em> at 51867.]]</p> <h2>Key Takeaways</h2> <p>FDA&rsquo;s proposal would change the current food ingredient regulatory landscape by converting the current voluntary GRAS notice process into a mandatory notification framework for covered human and animal food uses. Although the proposal is not an FDA premarket approval requirement and does not require a company to await FDA&rsquo;s substantive evaluation before marketing, it would substantially expand FDA&rsquo;s visibility into self-determined GRAS uses, and likely result in greater public scrutiny of the use of GRAS ingredients more generally.</p> <p>Because companies may market a substance immediately after filing, without waiting for FDA&rsquo;s substantive review, there is an identifiable risk in going to market before FDA weighs in. If FDA later issues an insufficient basis letter or a not-GRAS determination, the company will already be in the marketplace when that adverse finding becomes public, unlike today&rsquo;s voluntary regime, where declining to submit avoids creating any public record at all. A post-market adverse determination can trigger immediate scrutiny from customers, retailers, and supply-chain partners already relying on the product, and heightens exposure to enforcement. Companies should weigh the benefit of early market entry against the cost of unwinding distribution or responding to customers after an adverse public determination.</p> <p>Beyond the risk of adverse action while already on the market, the notification requirement itself increases what becomes visible to FDA and the public. A submitted GRAS notice would give FDA (and potentially the public) access to the company&rsquo;s safety rationale and supporting information, and the proposal states that failure to meet the notification requirement may be considered in FDA&rsquo;s prioritization of substances for post-market review. Accordingly, companies should ensure that each GRAS conclusion is supported by a thorough, scientifically sound, and well-documented analysis &mdash; including with respect to the <em>general recognition</em> of the ingredient&rsquo;s safety by experts, before relying on the GRAS pathway.</p> <p>In anticipation of a final rule, companies may wish to consider the following:</p> <ul> <li><strong>Inventory and classify GRAS uses</strong>. Companies should identify substances currently marketed under self-determined GRAS conclusions, confirm the relevant conditions of use, and determine whether an exception may apply.</li> <li><strong>Strengthen GRAS dossiers</strong>. The quality and completeness of the underlying safety assessment will become more consequential. Companies should review existing files for the scientific evidence, expert analyses, and generally available information needed to support a GRAS conclusion.</li> <li><strong>Plan for legacy substances</strong>. For eligible substances already in interstate commerce, companies should evaluate whether to use the proposed one-year streamlined-submission pathway or prepare a full GRAS notice. That decision will require consideration of the applicable exception, the available documentation, and potential disclosure implications.</li> <li><strong>Assess market-timing risk</strong>. Companies should decide, on a case-by-case basis, whether to market a substance immediately upon filing or to wait for a more favorable indication from FDA, weighing the commercial benefit of early entry against the risk of having to respond to an adverse determination after the product is already in the marketplace.</li> <li><strong>Address disclosure and supply-chain issues</strong>. Because GRAS notices and streamlined submissions may become publicly accessible, companies should carefully identify information that may warrant confidential treatment. Companies should also coordinate with suppliers and customers to determine who will assume responsibility for any notification and whether the available supporting documentation is sufficient.</li> </ul> <p style="text-align: center;">* * *</p> <p>The proposed rule is open for public comment until December 9, 2026. Companies and trade associations should consider submitting comments, particularly regarding the scope of the exceptions, the adequacy of the streamlined submission pathway, and the compliance timeline.</p> <p>We will continue to monitor FDA developments relating to the proposed mandatory GRAS-notification rule. If you have any questions about the proposal, please reach out to one of the authors of this Advisory or to your existing Arnold &amp; Porter contacts.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{842AA6E3-9B4C-427F-BB15-2815E1FA9572}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/will-exxon-mobil-v-cimex-lead-to-more-helms-burton-act-claimsJohn B. Bellinger, IIIhttps://www.arnoldporter.com/en/people/b/bellinger-john-bjohn.bellinger@arnoldporter.comR. Reeves Andersonhttps://www.arnoldporter.com/en/people/a/anderson-r-reevesreeves.anderson@arnoldporter.comJack Hooverhttps://www.arnoldporter.com/en/people/h/hoover-jackjack.hoover@arnoldporter.comOn June 23, 2026, in a 6-3 decision in <em>Exxon Mobil Corp. v. Corporaci&oacute;n CIMEX, S.A.</em>, the Supreme Court held that the Helms-Burton Act (the Act) abrogates the foreign sovereign immunity of Cuban agencies and instrumentalities. Plaintiffs suing those entities under Title III of the Act &mdash; a 1996 law that gives U.S. nationals a private right of action against anyone who &ldquo;traffics&rdquo; in property the Cuban government confiscated &mdash; need not separately establish an exception to immunity under the Foreign Sovereign Immunities Act.Thu, 13 Aug 2026 00:00:00 -0500<p>On June 23, 2026, in a 6-3 decision in <em>Exxon Mobil Corp. v. Corporaci&oacute;n CIMEX, S.A.</em>, the Supreme Court <a rel="noopener noreferrer" href="https://www.supremecourt.gov/opinions/25pdf/24-699_f204.pdf" target="_blank">held</a> that the Helms-Burton Act (the Act) abrogates the foreign sovereign immunity of Cuban agencies and instrumentalities. Plaintiffs suing those entities under Title III of the Act &mdash; a 1996 law that gives U.S. nationals a private right of action against anyone who &ldquo;traffics&rdquo; in property the Cuban government confiscated &mdash; need not separately establish an exception to immunity under the Foreign Sovereign Immunities Act (FSIA).</p> <p>The decision removes a jurisdictional barrier for plaintiffs that had stood in the way of Title III suits against Cuban state-owned entities. Whether it produces a wave of new litigation is less certain. Litigation is expensive, the Cuban government has few assets in the United States, and sovereign immunity remains a barrier to post-judgment execution. Those realities may temper how many of the U.S. nationals holding confiscated-property claims choose to follow Exxon&rsquo;s lead. </p> <h2>Background</h2> <p>The case arises under the Cuban Liberty and Democratic Solidarity Act (LIBERTAD Act), commonly known as the <a rel="noopener noreferrer" href="https://www.congress.gov/bill/104th-congress/house-bill/927/text" target="_blank">Helms-Burton Act</a>, which Congress passed and President Clinton signed in 1996 to tighten economic pressure on Cuba&rsquo;s communist government. One provision of the statute, <a rel="noopener noreferrer" href="https://www.law.cornell.edu/uscode/text/22/6082" target="_blank">Title III</a>, allows U.S. nationals whose property was confiscated by the Cuban government to sue people and entities that &ldquo;traffic&rdquo; in that property. In addition to recovering the value of the confiscated property, plaintiffs may also seek treble damages in some instances. </p> <p>For more than two decades, no such suits could proceed. From 1996 to 2019, Presidents Clinton, Bush, Obama, and Trump each exercised the Act&rsquo;s suspension authority to hold Title III in abeyance. That changed in May 2019, when the Trump administration<a href="/-/media/files/perspectives/publications/2019/08/calm-before-the-storm.pdf?sc_lang=en&amp;rev=c1740c0efc68481f937c047fec51259a&amp;hash=75FFD6C7DA49DC0E78E640C17D91CF06"> allowed</a> Title III to go into effect for the first time, prompting more than 50 lawsuits, most of which have been filed against private, non-Cuban companies alleged to have used the confiscated properties in some way.</p> <p>In 2019, Exxon <a rel="noopener noreferrer" href="https://www.supremecourt.gov/DocketPDF/24/24-699/336043/20241227105128755_Exxon_PETITION%20FOR%20A%20WRIT%20OF%20CERTIORARI.pdf" target="_blank">sued</a> two Cuban state-owned enterprises, Corporaci&oacute;n Cimex, S.A. and Uni&oacute;n Cuba-Petr&oacute;leo, under Title III for trafficking in service stations, oil refineries, and other facilities that the Cuban government seized in 1960 from a subsidiary of Exxon&rsquo;s predecessor, Standard Oil. In 1969, the U.S. Foreign Claims Settlement Commission (FCSC) certified the value of the confiscated property at more than $70 million (more than $600 million in today&rsquo;s dollars). With statutory treble damages, Exxon sought more than $1 billion.</p> <p>The immunity question was central from the outset. Under the FSIA, foreign states and their instrumentalities are presumptively immune from suit in the United States. To overcome this presumption, a plaintiff must demonstrate that one of the FSIA&rsquo;s <a rel="noopener noreferrer" href="https://www.law.cornell.edu/uscode/text/28/part-IV/chapter-97" target="_blank">exceptions</a> applies. Title III does not explicitly waive the FSIA&rsquo;s grant of immunity, but it creates a right of action against any &ldquo;person&rdquo; who traffics in confiscated property, with &ldquo;person&rdquo; <a rel="noopener noreferrer" href="https://www.law.cornell.edu/uscode/text/22/6023#:~:text=or%20their%20equivalents.-,(11)Person,-The%20term%20%E2%80%9C" target="_blank">defined</a> in the statute to include &ldquo;any agency or instrumentality of a foreign state.&rdquo;</p> <p>The Cuban government-owned defendants moved to dismiss on immunity grounds. The U.S. District Court for the District of Columbia <a rel="noopener noreferrer" href="https://caselaw.findlaw.com/court/us-dis-crt-dis-col/2124021.html" target="_blank">agreed</a> that Title III does not itself displace the FSIA, and a divided panel of the D.C. Circuit affirmed, holding that Title III &ldquo;harmoniously coexists with the FSIA&rdquo; and that plaintiffs must therefore satisfy an FSIA exception to invoke the jurisdiction of U.S. courts. Judge Randolph dissented, concluding that Title III, standing alone, deprives Cuban defendants of immunity.[[N: The lower courts&rsquo; treatment of whether an FSIA exception was in fact satisfied was left for further proceedings; the D.C. Circuit remanded that issue for additional factfinding.]]</p> <h2>The Arguments</h2> <p>In the Supreme Court, Exxon <a rel="noopener noreferrer" href="https://www.supremecourt.gov/DocketPDF/24/24-699/385940/20251128123944417_24-699_Merits%20Brief_to%20e-file.pdf" target="_blank">argued</a> that Title III&rsquo;s text reflects clear congressional intent to abrogate the immunity of Cuban instrumentalities, principally through its definition of &ldquo;person&rdquo; to reach any &ldquo;agency or instrumentality of a foreign state.&rdquo; Exxon pointed to additional textual signals as well, including provisions assuming that suits and judgments against the Cuban government would follow, and Congress&rsquo; selective borrowing of the FSIA&rsquo;s service-of-process rules. Requiring plaintiffs also to satisfy an FSIA exception, Exxon contended, would defeat Title III&rsquo;s remedial purpose and block billions of dollars in legitimate claims.</p> <p>The Cuban defendants <a rel="noopener noreferrer" href="https://www.supremecourt.gov/DocketPDF/24/24-699/391287/20260109133437554_24-699%20Respondents%20Brief.pdf" target="_blank">countered</a> that the FSIA is the exclusive framework for obtaining jurisdiction over foreign sovereigns in U.S. courts. In their view, Title III contains no clear statement abrogating immunity and there is no &ldquo;irreconcilable conflict&rdquo; between the FSIA and the Helms-Burton Act such that the latter would displace the former. They emphasized that Congress has amended the FSIA repeatedly and always expressly, yet never added a Title III exception, and that an earlier draft of Helms-Burton would have amended the FSIA to abrogate immunity, but Congress dropped that provision before enactment.</p> <p>In its <a rel="noopener noreferrer" href="https://www.supremecourt.gov/DocketPDF/24/24-699/370948/20250827161345705_24-699%20Exxon%20Final.pdf" target="_blank">amicus brief</a> supporting Exxon, the Trump administration argued that the D.C. Circuit&rsquo;s decision creates an improper hurdle for Title III plaintiffs holding billions of dollars in potential claims. It warned that requiring an FSIA exception &ldquo;stymies critical foreign-policy interests in promoting accountability for the Cuban government&rsquo;s continuing to benefit from its illegal expropriations&rdquo; and urged the Court to hold that Title III independently abrogates immunity.</p> <h2>Ruling</h2> <p>Writing for the majority, Justice Kavanaugh reversed the D.C. Circuit and held that the Helms-Burton Act itself abrogates the immunity of Cuban agencies and instrumentalities so that Title III plaintiffs suing those entities need not also satisfy an FSIA exception. In reaching that conclusion, the Court drew on its sovereign immunity precedents, including its most recent sovereign immunity ruling, <em>Department of Agriculture Rural Development Rural Housing Service v. Kirtz</em>, 601 U. S. 42, 55 (2024), in which it held that a waiver of sovereign immunity (to allow suits against the federal government) must be &ldquo;clearly discernable from the sum total&rdquo; of Congress&rsquo; work. The Court applied that same standard in <em>Exxon</em> to determine whether Congress had abrogated Cuba&rsquo;s sovereign immunity, pointing to four aspects of the Helms-Burton Act that it viewed as collectively making clear Congress&rsquo; intention to do so.</p> <p>First, the text of the Act signals congressional intent to waive immunity. Title III creates a cause of action that expressly applies to foreign agencies and instrumentalities. The Act authorizes suits against any &ldquo;person&rdquo; who traffics in confiscated property, and it defines &ldquo;person&rdquo; to include &ldquo;any agency or instrumentality of a foreign state.&rdquo; The Court reasoned that, under its sovereign-immunity precedents, when Congress creates a cause of action that expressly applies to sovereign entities, that formulation can abrogate immunity even without a separate waiver provision.</p> <p>Second, applying the FSIA would, in effect, limit the scope of Title III&rsquo;s cause of action. The only potentially relevant FSIA exceptions &mdash; the commercial activity exception and the expropriation exception &mdash; each require a plaintiff to show commercial activity in the United States or an act with direct effect in the United States. Because Helms-Burton simultaneously codified a comprehensive embargo barring most commercial dealings between Americans and Cuban entities, a Title III plaintiff could have difficulty making such a showing. The Court declined to read Congress as having created a cause of action and then rendered it a nullity.</p> <p>Third, the Act&rsquo;s jurisdictional structure confirms that the FSIA does not apply. Helms-Burton provides that Title III suits proceed like any other action under 28 U.S.C. &sect; 1331, the general federal-question statute, whereas FSIA suits proceed under 28 U.S.C. &sect; 1330, which confers jurisdiction over foreign sovereigns only where an immunity exception applies. By grounding jurisdiction in &sect; 1331 rather than &sect; 1330, the Court reasoned, Congress signaled that Helms-Burton suits are not FSIA actions.</p> <p>Fourth, the Act gives the president plenary authority to suspend Title III suits based on national-security and foreign-policy assessments &mdash; an arrangement that echoes the pre-FSIA regime, in which the Executive Branch, not the courts, primarily decided questions of sovereign immunity. The Court found it implausible that Congress would restore that Executive Branch-centered framework while simultaneously subjecting these suits to the court-administered FSIA, particularly where the FSIA would bar nearly all of them.</p> <p>Justice Kagan dissented, joined by Justices Sotomayor and Jackson. The dissent stressed that a cause of action and an abrogation of immunity are analytically distinct, and that Helms-Burton says nothing about immunity even though it directly amended a different part of the FSIA &mdash; the execution-immunity provisions. That silence, the dissent argued, should counsel against finding abrogation, especially given the &ldquo;stringent&rdquo; clear-statement standard that applies to foreign sovereign immunity. The dissent further contended that Title III&rsquo;s cause of action does ample work without any abrogation, because it reaches the private parties that Congress identified as the statute&rsquo;s primary target, and that plaintiffs suing Cuban instrumentalities can still proceed by satisfying an FSIA exception.</p> <h2>Implications</h2> <p><em>A further crack in the FSIA&rsquo;s exclusivity</em>. <em>Exxon Mobil </em>is the latest decision qualifying the long-held understanding that the FSIA is the sole path to overcoming foreign sovereign immunity in U.S. courts. The Court took a similar step in <em><a href="/en/perspectives/advisories/2023/05/prosecution-of-foreign-states-in-us-courts">T&uuml;rkiye Halk Bankası A.Ş. v. United States</a></em> (2023), holding that the FSIA does not govern criminal prosecutions of foreign sovereigns. And in 2025, the Second Circuit<a href="/en/perspectives/advisories/2025/02/anti-terrorism-act-suits-against-foreign-states"> held</a> in <em>Schansman v. Sberbank</em> that foreign sovereigns may be sued for acts of terrorism under the Antiterrorism Act even if the FSIA&rsquo;s terrorism exceptions do not apply, provided another FSIA exception applies. <em>Exxon Mobil</em> now recognizes an implied statutory abrogation of immunity <em>outside</em> the FSIA, offering courts a way to interpret stand-alone statutes as stripping immunity without amending the FSIA. In doing so, the Court continues to chip away at sovereign immunity through other, non-FSIA statutory schemes. Litigants and foreign sovereigns should expect plaintiffs to continue to seek ways to create further holes in the FSIA&rsquo;s exclusive determination of exceptions to foreign sovereign immunity.</p> <p><em>An open question for non-Cuba sovereigns</em>. The Court expressly declined to decide whether Helms-Burton also abrogates the immunity of other sovereigns who may have trafficked in confiscated Cuban property. </p> <p>That reservation is significant. As the dissent noted, Title III&rsquo;s cause of action reaches non-Cuban and Cuban instrumentalities alike, so the majority&rsquo;s logic does not obviously stop at Cuba. Third-country state-owned enterprises doing business in Cuba now face real uncertainty about their exposure.</p> <p><em>Winning a judgment is not the same as collecting on it</em>. As Justice Kagan emphasized in her dissent, jurisdictional immunity and execution immunity are separate questions. Even a plaintiff who obtains a Title III judgment against a Cuban instrumentality must still satisfy an FSIA execution-immunity exception to attach sovereign assets in the United States. For that reason,<em> Exxon Mobil</em> lowers the barrier to entering the courthouse but does not ensure recovery, and plaintiffs will not escape the FSIA completely. The majority suggested, however, that a judgment against Cuba may still hold value, even if a plaintiff cannot immediately collect on that judgment &mdash; future changes in the law may increase the prospects of collection, and the judgments could act as leverage for the United States in its relations with Cuba.</p> <p><em>A win for the administration&rsquo;s Cuba policy</em>. The decision advances the Trump administration&rsquo;s foreign policy towards Cuba. The administration&rsquo;s aggressive rhetoric towards Cuba has been increasingly frequent and direct in the months preceding the <em>Exxon Mobil </em>decision, and the expanded number of claims against the Cuban government under the Helms-Burton Act will only serve to advance President Trump&rsquo;s adversarial stance toward the communist nation.</p> <p><em>A new avenue for plaintiffs</em> <em>&mdash;</em> <em>with limits</em>. Though the <em>Exxon Mobil</em> decision opens the door to more suits against Cuban government agencies and instrumentalities, it remains to be seen how many new plaintiffs will jump at this opportunity. While there are over 5,000 holders of FCSC claims, only a tiny fraction have opted to sue Cuban state-owned entities. Instead, most suits have been against American companies with commercial ties to Cuba. Unlike private entities, Cuba lacks substantial resources with which to pay judgments. And as noted above, even if judgments are obtained, plaintiffs must overcome the continuing immunity of sovereign assets from post-judgment attachment.</p> <p style="text-align: center;">*&nbsp; &nbsp;*&nbsp; &nbsp;*</p> <p>Arnold &amp; Porter can advise companies on how to navigate these recent developments. We regularly counsel U.S. and foreign companies and foreign sovereigns on foreign sovereign immunities issues. Companies seeking guidance on these issues should contact the authors of this Advisory or their usual Arnold &amp; Porter contact.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{D3FE3D11-9269-4A9E-B096-88831AAF48C7}https://sganaturalgas.org/event/ai-data-centers-domestic-natural-gas-demand-emerging-contract-risks-3000/C. Thomas Krusehttps://www.arnoldporter.com/en/people/k/kruse-thomastom.kruse@arnoldporter.comJack Vincenthttps://www.arnoldporter.com/en/people/v/vincent-jackjack.vincent@arnoldporter.comThu, 13 Aug 2026 00:00:00 -0500{9D9259A4-96B4-4B58-B5C1-75B6680E2426}https://www.arnoldporter.com/en/perspectives/news/2026/08/the-american-lawyer-names-arnold-porter-among-top-10-on-2026-a-listArnold &amp; Porter has once again been recognized on<em> The American Lawyer&rsquo;s </em>A-List, earning the distinguished honor of being ranked No. 7 among the top 20 firms. This marks the 17th year the firm has been included on the list since its introduction in 2003. The A-List ranking is based on a combination of factors, both financial and cultural, including financial performance, pro bono commitment, associate satisfaction, racial diversity and gender diversity (the percentage of equity partners who are women).Wed, 12 Aug 2026 00:00:00 -0500<p>Arnold &amp; Porter has once again been recognized on <em>The American Lawyer&rsquo;s</em> A-List, earning the distinguished honor of being ranked No. 7 among the top 20 firms. This marks the 17th year the firm has been included on the list since its introduction in 2003. The A-List ranking is based on a combination of factors, both financial and cultural, including financial performance, pro bono commitment, associate satisfaction, racial diversity and gender diversity (the percentage of equity partners who are women).</p> <p>Michael Daneker, Global Co-Chair of Arnold &amp; Porter, said, &ldquo;We&rsquo;re honored to once again be named to <em>The American Lawyer&rsquo;s</em> A-List. This recognition reflects both the exceptional work our colleagues do on behalf of our clients and the values-driven culture that has long distinguished Arnold &amp; Porter. We&rsquo;re proud of what we&rsquo;ve accomplished together and remain focused on building on that success through collaboration, innovation, and an enduring commitment to excellent client service.&rdquo;</p> <p>Ellen Kaye Fleishhacker, Global Co-Chair of Arnold &amp; Porter, added: &ldquo;What makes this recognition particularly meaningful is that it reflects the strength of our firm across so many areas. This achievement is made possible by the exceptional people of Arnold &amp; Porter, whose talent, professionalism, and commitment to excellence continue to distinguish our firm.&rdquo;</p> <p>According to <em>The American Lawyer's</em> report, firms on the A-List successfully balance industry demands with core values. The American Lawyer also recently recognized Arnold &amp; Porter as a leading firm on its 2026 "<a href="https://www.law.com/americanlawyer/pro-bono-report/?kw=The+2026+Pro+Bono+Report&amp;utm_position=3&amp;utm_source=email&amp;utm_medium=enl&amp;utm_campaign=morningupdate&amp;utm_content=20260707&amp;utm_term=tal&amp;oly_enc_id=4468I6071134A2X&amp;user_id=5993fb9e6ce954ed0e8b573e">Pro Bono Scorecard</a>" for its national and international pro bono work.</p>{A3B3501E-BD5B-4342-AFCB-72E01B160B38}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/fsias-state-instrumentality-divideJohn B. Bellinger, IIIhttps://www.arnoldporter.com/en/people/b/bellinger-john-bjohn.bellinger@arnoldporter.comR. Reeves Andersonhttps://www.arnoldporter.com/en/people/a/anderson-r-reevesreeves.anderson@arnoldporter.comSally Peihttps://www.arnoldporter.com/en/people/p/pei-sallysally.pei@arnoldporter.comDana Khabbazhttps://www.arnoldporter.com/en/people/k/khabbaz-danadana.khabbaz@arnoldporter.comHannah M. Beiderwiedenhttps://www.arnoldporter.com/en/people/b/beiderwieden-hannahhannah.beiderwieden@arnoldporter.comJack Hooverhttps://www.arnoldporter.com/en/people/h/hoover-jackjack.hoover@arnoldporter.comAaron Sobelhttps://www.arnoldporter.com/en/people/s/sobel-aaronaaron.sobel@arnoldporter.comThe Foreign Sovereign Immunities Act (FSIA) broadly protects foreign sovereigns and certain affiliated entities from suit and attachment in U.S. courts, but the precise classification of a defendant &mdash; as the foreign state itself, a political subdivision, or an agency or instrumentality &mdash; can have significant legal consequences. Courts generally treat core governmental bodies such as ministries, embassies, and armed forces as part of the state; regional governments such as provinces and cities as political subdivisions; and legally separate entities such as state-owned enterprises, central banks, museums, universities, and sovereign wealth funds as agencies or instrumentalities, with courts examining factors including an entity&rsquo;s functions, independence, relationship to the state, and direct majority ownership. These distinctions are consequential because classification determines the applicable rules for service of process, substantive immunity, attachment and execution of property, punitive damages, and venue; accordingly, correctly identifying a sovereign entity&rsquo;s status at the outset &mdash; and monitoring changes in ownership or status during litigation &mdash; can be critical to an FSIA case.&nbsp;Wed, 12 Aug 2026 00:00:00 -0500<p>The Foreign Sovereign Immunities Act of 1976 (FSIA) shields foreign states from suit in the United States and protects certain sovereign property from seizure by court order. As we explained in our <a href="/en/perspectives/advisories/2021/01/can-you-be-sued-under-fsia">January 2021 Advisory</a>, the term &ldquo;foreign state&rdquo; sweeps broadly; it covers not only the foreign sovereign itself but also its &ldquo;political subdivisions&rdquo; and its &ldquo;agencies and instrumentalities.&rdquo; But those different classifications matter. Whether a defendant is the foreign state itself, a political subdivision, or an agency or instrumentality can affect the rules governing service of process, the availability of certain immunity defenses, and the scope of attachment and execution protections.</p> <p>Classifying an entity is not always straightforward. Foreign governments operate through an array of nominally distinct entities &mdash; ministries, regulatory bodies, subnational governments, state-owned enterprises, museums, universities, and sovereign wealth funds, to name a few &mdash; and courts do not always agree on where particular entities fall within the FSIA&rsquo;s definitional framework.</p> <p>In this Advisory, we explain what kinds of sovereign entities are entitled to immunity, how courts draw those distinctions, and why getting it right can matter from the outset of a case.</p> <h2>The Three Categories of FSIA Defendants</h2> <p>The FSIA affords foreign states two related but distinct protections: immunity from suit and immunity from attachment and execution against certain property. Although those protections are subject to statutory <a href="/en/perspectives/advisories/2021/01/can-you-be-sued-under-fsia">exceptions</a>&nbsp;&mdash; such as the commercial activity exception, the expropriation exception, and the terrorism exception &mdash; they extend only to defendants who qualify as &ldquo;foreign states&rdquo; under the statute. The FSIA itself makes clear that &ldquo;foreign state&rdquo; is a broad term: it covers (1) the foreign state itself, (2) a &ldquo;political subdivision of a foreign state,&rdquo; and (3) &ldquo;an agency or instrumentality of a foreign state.&rdquo;[[N: 28 U.S.C. &sect; 1603(a). To illustrate these categories using the government of Canada: (1) would include Canada, (2) would include British Columbia, and (3) would include the Canada Post Corporation.&nbsp;]]</p> <h3>Foreign States</h3> <p>Of course, a &ldquo;foreign state&rdquo; includes the state proper &mdash; that is, an entity that has a defined territory and a permanent population, under the control of its own government, and that engages in, or has the capacity to engage in, formal relations with other states.[[N: Restatement (Fourth) of Foreign Relations Law &sect; 452 cmt. a (A.L.I. 2018).&nbsp;]] Beyond the state proper, courts routinely define national governments, embassies, permanent missions, armed forces, and government ministries as part of the &ldquo;foreign state&rdquo; &mdash; because these entities are so closely bound up with the structure of the sovereign that they defy treatment as anything else.[[N: <em>See</em> Restatement (Fourth) of Foreign Relations Law &sect; 452 cmt. b; <em>id.</em> &sect; 452 reporters&rsquo; note 3; <em>see also</em>, <em>e.g.</em>, <em>Garb v. Republic of Poland</em>, 440 F.3d 579, 594 (2d Cir. 2006) (Poland&rsquo;s Ministry of Treasury was an &ldquo;integral part of Poland&rsquo;s political structure&rdquo;); <em>Transaero, Inc. v. La Fuerza Aerea Boliviana</em>, 30 F.3d 148, 153 (D.C. Cir. 1994) (Air Force of Bolivia was a foreign state); <em>S.K. Innovation, Inc. v. Finpol</em>, 854 F. Supp. 2d 99, 108 (D.D.C. 2012) (Kazakhstan&rsquo;s Agency on Economic Crimes and Corruption was a foreign state).]] Foreign ministries, in particular, are treated as foreign states, because the management of a country&rsquo;s foreign affairs is an indispensable government function.[[N: <em>See</em>, <em>e.g.</em>, <em>Roeder v. Islamic Republic of Iran</em>, 333 F.3d 228, 234 (D.C. Cir. 2003) (holding that the Iranian Ministry of Foreign Affairs warranted classification as part of the state itself).]]</p> <p>In unusual circumstances, a political party may qualify as a foreign state. In <em>Missouri v. People&rsquo;s Republic of China</em> &mdash; a suit seeking damages against the People&rsquo;s Republic of China and various related entities for their role in the COVID-19 pandemic &mdash; the Eighth Circuit held that the Chinese Communist Party was the &ldquo;alter ego&rdquo; of the Chinese state and therefore entitled to immunity as the sovereign itself.[[N: <em>Missouri ex rel. Bailey v. People&rsquo;s Republic of China</em>, 90 F.4th 930, 934 (8th Cir. 2024).]] Political parties are not ordinarily treated as the state itself,[[N: <em>See</em>, <em>e.g.</em>, <em>Tachiona v. United States</em>, 386 F.3d 205, 222 (2d Cir. 2004) (holding that Zimbabwe&rsquo;s ruling party was a &ldquo;private entity and not an agency or instrumentality of a foreign state&rdquo;).]] but the court reasoned that the Chinese Communist Party, by exercising pervasive control over the Chinese government and all other defendants in the case, effectively constituted the &ldquo;body politic&rdquo; governing China.[[N: <em>Missouri ex rel. Bailey</em>, 90 F.4th at 935.]]</p> <h3>Political Subdivisions of Foreign States</h3> <p>Before the passage of the FSIA, courts generally did not consider cities and towns of foreign nations to be immune from suit.[[N: Restatement (Third) of Foreign Relations Law &sect; 452 cmt. b (A.L.I. 1987); <em>id.</em> &sect; 452 reporters&rsquo; note 1; <em>see also</em> E.H. Schopler, Annotation, Modern Status of the Rules as to Immunity of Foreign Sovereign from Suit in Federal or State Courts, 25 A.L.R.3d 322, &sect; 6&amp;#91a&amp;#93 (1969) (noting that, though the Second Restatement stated definitively that constituent units of a state were not entitled to immunity, courts disagreed with each other on this issue).]] But the FSIA extended the umbrella of immunity to &ldquo;political subdivisions&rdquo; of a foreign state, which include regional subdivisions of the state, such as cities, districts, cantons, provinces, and territories.[[N: Restatement (Fourth) of Foreign Relations Law &sect; 452 reporters&rsquo; note 2 (collecting cases).]] So, cities like Amsterdam are protected from suit.[[N: <em>Malewicz v. City of Amsterdam</em>, 362 F. Supp. 2d 298, 306 (D.D.C. 2005); <em>see also Beierwaltes v. L&rsquo;Office Federale De La Culture De La Confederation Suisse</em>, 999 F.3d 808, 819 (2d Cir. 2021) (Canton of Geneva &ldquo;undisputed&amp;#91ly&amp;#93&rdquo; a political subdivision of Swiss Confederation); <em>Big Sky Network Canada, Ltd. v. Sichuan Provincial Gov&rsquo;t</em>, 533 F.3d 1183, 1189 (10th Cir. 2008) (Sichuan Province and Qinyang District were political subdivisions of the People&rsquo;s Republic of China); Restatement (Third) of Foreign Relations Law &sect; 452 cmt. b (explaining that, under the FSIA, &ldquo;constituent units of federal unions,&rdquo; including &ldquo;cantons,&rdquo; &ldquo;are entitled to sovereign immunity to the same extent as the federal state itself&rdquo;); Restatement (Fourth) of Foreign Relations Law &sect; 452 reporters&rsquo; note 2 (&ldquo;States and provinces are political subdivisions under the FSIA.&rdquo;).&nbsp;]]</p> <p>The line between a foreign state and its political subdivisions, however, is not always clear. Courts sometimes describe &mdash; incorrectly, in our view &mdash; certain ministries or other core components of a national government as political subdivisions rather than as the state itself. The Fourth Circuit, for instance, has held that the Iraqi Ministry of Defense qualifies as a political subdivision of Iraq,[[N: <em>Wye Oak Tech., Inc. v. Republic of Iraq</em>, 666 F.3d 205, 215 (4th Cir. 2011); <em>see also Garb</em>, 440 F.3d at 596 n.21 (suggesting that &ldquo;political subdivisions&rdquo; in the FSIA refers to all governmental units beneath the central government, rather than different geographical subdivisions of government).]] while other courts have treated core governmental components &mdash; including foreign ministries, armed forces, intelligence services, and diplomatic missions &mdash; as part of the foreign state itself.[[N: <em>See</em> Restatement (Fourth) of Foreign Relations Law &sect; 452 cmt. b; <em>id</em>. &sect; 452 reporters&rsquo; note 3; <em>see also Ben-Rafael v. Islamic Republic of Iran</em>, 718 F. Supp. 2d 25, 32 (D.D.C. 2010) (holding that the Iranian Revolutionary Guard Corps was a governmental entity and thus the foreign state itself); <em>Gates v. Syrian Arab Republic</em>, 580 F. Supp. 2d 53, 64 (D.D.C. 2008) (holding that the Syrian military intelligence service was the &ldquo;foreign state itself&rdquo;), aff&rsquo;d, 646 F.3d 1 (D.C. Cir. 2011); <em>Int&rsquo;l Rd. Fed&rsquo;n v. Embassy of the Democratic Republic of the Congo</em>, 131 F. Supp. 2d 248, 250 (D.D.C. 2001) (holding that an embassy of the Democratic Republic of the Congo was a foreign state); <em>Berdakin v. Consulado de la Republica de El Salvador</em>, 912 F. Supp. 458, 461 (C.D. Cal. 1995) (holding that a consulate of El Salvador qualified as a foreign state).]] Courts have also held offices within ministries to be political subdivisions &mdash; among them, the Chief Mining Commissioner of Zimbabwe&rsquo;s Ministry of Mines[[N: <em>Amaplat Mauritius Ltd. v. Zimbabwe Mining Dev. Corp.</em>, 663 F. Supp. 3d 11, 28 (D.D.C. 2023), <em>rev&rsquo;d in part, vacated in part, and remanded with instructions to dismiss for lack of jurisdiction</em>, 143 F.4th 496 (D.C. Cir. 2025), cert. denied, No. 25-699, 2026 WL 1127199 (U.S. Apr. 27, 2026).]] and the Office of the Minister of Finance of Trinidad[[N: <em>Singh ex rel. Singh v. Caribbean Airlines Ltd.</em>, 798 F.3d 1355, 1359-60 (11th Cir. 2015); <em>see also Missouri ex rel. Bailey</em>, 90 F.4th at 935 (holding that China&rsquo;s Ministry of Civil Affairs, Ministry of Emergency Management, and National Health Commission, as well as provincial and township-level bodies, were political subdivisions of China based on their direct connection to the official government).]] &mdash; even though Congress suggested that &ldquo;a department or ministry which acts and is suable in its own name&rdquo; could be an agency or instrumentality rather than a political subdivision.[[N: H.R. Rep. No. 94-1487, at 15 (1976), reprinted in 1976 U.S.C.C.A.N. 6604, 6614.]]</p> <p>For practical purposes, though, the distinction between the foreign state itself and its political subdivisions usually does not matter. The FSIA treats foreign states and their political subdivisions identically for purposes of service, immunity, and attachment. The real action is in distinguishing foreign states and subdivisions from agencies and instrumentalities. </p> <h3>Agencies and Instrumentalities of Foreign States</h3> <p>An &ldquo;agency&rdquo; or &ldquo;instrumentality&rdquo; of a foreign state is an entity that is (1) &ldquo;a separate legal person, corporate or otherwise&rdquo;; (2) &ldquo;an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof&rdquo;; and (3) neither a citizen of a U.S. state nor created under the laws of any third country.[[N: 28 U.S.C. &sect; 1603(b).]] The critical feature is legal separateness: unlike ministries or regional governments, agencies and instrumentalities are distinct legal entities, even when closely tied to the sovereign. </p> <p>State-owned enterprises &mdash; like national airlines, art galleries, telecommunications companies, railways, petroleum companies, and sovereign wealth funds &mdash; are paradigmatic examples of agencies or instrumentalities.[[N: <em>See Havlish v. Taliban</em>, 152 F.4th 339, 357 (2d Cir. 2025), <em>reh&rsquo;g en banc denied</em>, 170 F.4th 100 (2d Cir. 2026) (holding that Da Afghanistan Bank was an agency or instrumentality of the state of Afghanistan); <em>Chey v. Orbitz Worldwide, Inc.</em>, 983 F. Supp. 2d 1219, 1228 (D. Haw. 2013) (holding that foreign airline, a majority of whose shares were owned by China, was an agency or instrumentality of China); <em>Bayer &amp; Willis Inc. v. Republic of Gambia</em>, 283 F. Supp. 2d 1, 4 (D.D.C. 2003) (holding that a Gambian telecommunications company 99% owned by The Gambia was an &ldquo;agency or instrumentality&rdquo; of The Gambia); <em>Abrams v. Soci&eacute;t&eacute; Nationale Des Chemins De Fer Fran&ccedil;ais</em>, 389 F.3d 61, 63 (2d Cir. 2004) (holding that the French national railroad company was an agency or instrumentality); <em>Adler v. Fed. Republic of Nigeria</em>, 107 F.3d 720, 723 (9th Cir. 1997) (holding that the Nigerian National Petroleum Corporation was an instrumentality of Nigeria); <em>Janvey v. Libyan Inv. Auth.</em>, 840 F.3d 248, 259 (5th Cir. 2016) (holding that the Libyan Investment Authority, a sovereign wealth fund, was an instrumentality of Libya).]] Central banks have also been treated as agencies or instrumentalities of the sovereign,[[N: <em>Adler</em>, 107 F.3d at 723 (holding that the Central Bank of Nigeria was an instrumentality of Nigeria); <em>Weininger v. Castro</em>, 462 F. Supp. 2d 457, 497 (S.D.N.Y. 2006) (holding that the central bank of Cuba was an agency or instrumentality); <em>S &amp; S Mach. Co. v. Masinexportimport</em>, 706 F.2d 411, 414 (2d Cir. 1983) (holding that &ldquo;&amp;#91&amp;#93tate-owned central banks indisputably are included in the &sect; 1603(b) definition of &lsquo;agency or instrumentality.&rsquo;&rdquo;).]] as have some cultural and educational institutions, including state universities and museums.[[N: <em>Compare de Csepel v. Republic of Hungary</em>, 169 F. Supp. 3d 143, 167 (D.D.C. 2016) (holding that museums were an agency or instrumentality of Hungary, and observing that defendants already admitted that those museums and a state university were agencies or instrumentalities), <em>aff&rsquo;d in part, appeal dismissed in part, and remanded</em>, 859 F.3d 1094 (D.C. Cir. 2017), <em>and</em> <em>Altmann v. Republic of Austria</em>, 317 F.3d 954, 969 (9th Cir. 2002) (observing that the defendants did not contest that the Austrian Gallery is an agency or instrumentality of Austria), <em>amended on denial of reh&rsquo;g</em>, 327 F.3d 1246 (9th Cir. 2003), <em>aff&rsquo;d on other grounds</em>, 541 U.S. 677 (2004), <em>with Berg v. Kingdom of the Netherlands</em>, 24 F.4th 987, 993-96 (4th Cir. 2022) (concluding that Ministry of Education, Culture &amp; Science of the Netherlands and Cultural Heritage Agency of the Netherlands were not separate legal persons but instead political subdivisions of the Netherlands), <em>and Taylor v. Kingdom of Sweden</em>, No. 18-cv-1133, 2019 WL 3536599, at *4 (D.D.C. Aug. 2, 2019) (concluding that Sweden&rsquo;s National Museum of World Culture&rsquo;s core functions were &ldquo;intertwined with Sweden&rsquo;s sovereign obligations such that &amp;#91it was&amp;#93 part of the foreign state&rdquo;).]] The Eighth Circuit extended that analysis to the Wuhan Institute of Virology and the Chinese Academy of Sciences, finding both legally separate from the Chinese state and thus agencies or instrumentalities, even though they remained closely connected to it.[[N: <em>Missouri ex rel. Bailey</em>, 90 F.4th at 935.]]</p> <h2>How Courts Decide Whether an Entity Is an Agency or Instrumentality (Rather Than Part of the State Itself)</h2> <p>Courts have provided different articulations of the inquiry into whether an entity is an agency or instrumentality, rather than part of the state itself. However framed, the basic question is whether the entity is meaningfully separate from the foreign state itself. In practice, the analysis usually turns on the entity&rsquo;s function, its relationship to the state, and its ownership structure. </p> <h3>The Core Functions Test</h3> <p>Some courts apply the so-called &ldquo;core functions&rdquo; test to determine whether an entity is sufficiently separate from the foreign state.[[N: Restatement (Fourth) of Foreign Relations Law &sect; 452 reporters&rsquo; notes 4-5; <em>Transaero</em>, 30 F.3d at 153; Garb, 440 F.3d at 592.]] That test looks to whether the entity&rsquo;s predominant functions are governmental or commercial.[[N:&nbsp;<em>Transaero</em>, 30 F.3d at 153; <em>Garb</em>, 440 F.3d at 594.]] If those functions are governmental &mdash; for example, diplomacy, military operations, or foreign affairs &mdash; courts tend to treat the entity as part of the state itself.[[N:&nbsp;<em>See</em>, <em>e.g.</em>, <em>Transaero</em>, 30 F.3d at 153 (holding that the Bolivian Air Force was part of the Bolivian state itself); <em>Roeder</em>, 333 F.3d at 234 (holding that &ldquo;&amp;#91t&amp;#93he conduct of foreign affairs is an important and &lsquo;indispensable&rsquo; government function,&rdquo; so that the Iranian Ministry of Foreign Affairs was part of Iran itself).]] If the entity&rsquo;s core functions are mainly commercial &mdash; for example, those of a national oil company &mdash; courts are more likely to treat it as a separate agency or instrumentality.[[N:&nbsp;<em>See Transaero</em>, 30 F.3d at 152; <em>see also Adler</em>, 107 F.3d at 723.]]</p> <p>But that does not mean any entity connected to commercial activity is automatically commercial and not part of the state for FSIA purposes. One court held, for example, that while Zimbabwe&rsquo;s Chief Mining Commissioner&rsquo;s duties &ldquo;unquestionably touch on commercial activity,&rdquo; the commissioner&rsquo;s role in connection with that activity was &ldquo;as a government regulator and adjudicator&rdquo; &mdash; &ldquo;not as a market participant&rdquo; &mdash; and the commissioner thus remained part of the state.[[N:&nbsp;<em>Amaplat</em>, 663 F. Supp. 3d at 28.]] By contrast, the same court found in a different case that a state-owned museum&rsquo;s functions were &ldquo;largely commercial,&rdquo; and so classified that entity as an agency or instrumentality.[[N:&nbsp;<em>de Csepel</em>, 169 F. Supp. 3d at 167.]]</p> <h3>The Organ Inquiry</h3> <p>Other courts proceed more directly from Section 1603(b)&rsquo;s statutory categories by asking whether an entity qualifies as an &ldquo;organ&rdquo; of the state or is majority-owned by one. Because the FSIA does not define &ldquo;organ,&rdquo; courts have developed different multi-factor tests.[[N: Restatement (Fourth) of Foreign Relations Law &sect; 452 reporters&rsquo; note 5; <em>see Kelly v. Syria Shell Petroleum Dev. B.V.</em>, 213 F.3d 841, 846 (5th Cir. 2000).]] The most widely applied framework examines:</p> <p style="margin-left: 40px;">(1) whether the foreign state created the entity for a national purpose; (2) whether the foreign state actively supervises the entity; (3) whether the foreign state requires the hiring of public employees and pays their salaries; (4) whether the entity holds exclusive rights to some right in the [foreign] country; and (5) how the entity is treated under foreign state law.[[N:&nbsp;<em>Kelly</em>, 213 F.3d at 846-47 (quoting <em>Supra Med. Corp. v. McGonigle</em>, 955 F. Supp. 374, 379 (E.D. Pa. 1997)); <em>accord Filler v. Hanvit Bank</em>, 378 F.3d 213, 217 (2d Cir. 2004). Other circuits have devised tests that include and expand upon the same five factors. <em>See</em>, <em>e.g.</em>, <em>EIE Guam Corp. v. Long Term Credit Bank of Japan, Ltd.</em>, 322 F.3d 635, 640 (9th Cir. 2003) (employing similar test that includes an additional sixth factor, &ldquo;the level of government financial support&rdquo;); <em>USX Corp. v. Adriatic Ins. Co.</em>, 345 F.3d 190, 209 (3d Cir. 2003) (employing the same test as the Ninth Circuit, with the addition of a seventh factor, &ldquo;the ownership structure of the entity&rdquo;).]]</p> <p>These factors are not applied mechanically, nor must they all be met for an entity to qualify as an organ.[[N:&nbsp;<em>See Kelly</em>, 213 F.3d at 847; <em>Murphy v. Korea Asset Mgmt. Corp.</em>, 421 F. Supp. 2d 627, 645 (S.D.N.Y. 2005), <em>aff&rsquo;d</em>, 190 F. App&rsquo;x 43 (2d Cir. 2006).]] After all, most entities of this type will likely share characteristics of both governmental and non-governmental bodies.[[N:&nbsp;<em>See Murphy</em>, 421 F. Supp. 2d at 641.]] At bottom, though, the key consideration is &ldquo;the entity&rsquo;s ability to act independently.&rdquo;[[N:&nbsp;<em>Gates v. Victor Fine Foods</em>, 54 F.3d 1457, 1461 (9th Cir. 1995); <em>see Havlish</em>, 152 F.4th at 357 (implying that Da Afghanistan Bank would not satisfy the organ prong because &ldquo;the Afghanistan banking law vests &amp;#91it&amp;#93 with substantial autonomy&rdquo;).]]</p> <h3>Majority Ownership</h3> <p>The final way an entity can be classified as an agency or instrumentality of a foreign state is if the state or political subdivision thereof directly owns a majority stake in that entity.[[N:&nbsp;<em>Dole Food Co. v. Patrickson</em>, 538 U.S. 468, 477 (2003); <em>see</em>, <em>e.g.</em>, <em>Havlish</em>, 152 F.4th at 357 (holding that Da Afghanistan Bank satisfied the majority-ownership prong because it was &ldquo;100% owned by Afghanistan&rdquo;).]]</p> <p><em>Direct Ownership</em>. The entity must be more than 50% directly owned by the state to qualify for immunity. The Supreme Court has held that indirect ownership, where the entity is &ldquo;separated from the [state] by one or more intermediate corporate tiers,&rdquo; is insufficient.[[N:&nbsp;<em>Dole Food</em>, 538 U.S. at 473.]] Applying the majority-ownership test, one court has held that the Korean government&rsquo;s ownership of up to 70% of the Korea Asset Management Corporation was unavailing because its direct ownership stake was only 42.8% &mdash; insufficient to satisfy the majority test.[[N:&nbsp;<em>Murphy</em>, 421 F. Supp. 2d at 640 &amp; n.12, 645.]] Therefore, the entity could qualify as an agency or instrumentality only if it were also an organ of Korea.</p> <p><em>Timing of Ownership</em>. The Supreme Court has held that FSIA instrumentality status is ordinarily assessed &ldquo;at the time suit is filed,&rdquo; not at the time of the alleged wrong.[[N:&nbsp;<em>Dole Food</em>, 538 U.S. at 478-80 (holding that chemical companies were not entitled to instrumentality status because &ldquo;&amp;#91a&amp;#93ny relationship recognized under the FSIA between &amp;#91them&amp;#93 and Israel had been severed before suit was commenced&rdquo;).]] Thus, a French railroad company could invoke the FSIA even though it had been privately owned during World War II (when the claims arose), because France wholly owned that entity when the suit was filed.[[N:&nbsp;<em>Abrams</em>, 389 F.3d at 64-65.]] In the Second Circuit, however, FSIA immunity may also attach &ldquo;mid-suit&rdquo; if a foreign state acquires majority ownership after the complaint is filed.[[N:&nbsp;<em>Bartlett v. Baasiri</em>, 81 F.4th 28, 33 (2d Cir. 2023); <em>see Schansman v. Sberbank of Russia PJSC</em>, 128 F.4th 70, 80 (2d Cir. 2025), <em>cert. denied</em>, 146 S. Ct. 117 (2025) (holding that Russian bank qualified as an agency or instrumentality under the FSIA after the Russian Ministry of Finance acquired a majority ownership interest post-filing).]] The practical implication is that sovereign status must be monitored throughout the life of the case, particularly where sanctions, nationalizations, restructurings, or other events alter a sovereign&rsquo;s ownership stake after suit is filed.</p> <h2>What the FSIA Does Not Cover</h2> <p>Prior to 2010, several courts of appeals had applied the FSIA&rsquo;s protections to foreign <em>officials</em>, in addition to foreign government entities. The Supreme Court clarified in <em>Samantar v. Yousuf</em> that foreign officials are not &ldquo;foreign states&rdquo; within the meaning of the act. Their immunity, if any, is governed instead by common law.[[N:&nbsp;<em>Samantar v. Yousuf</em>, 560 U.S. 305 (2010).]]</p> <p>Nor does the FSIA govern diplomatic or consular immunity.[[N:&nbsp;<em>Id.</em> at 319 n.12.]] Those immunities are instead governed by separate treaty-and-statute frameworks, including the Vienna Convention on Diplomatic Relations, the Diplomatic Relations Act, and the Vienna Convention on Consular Relations.[[N: Vienna Convention on Diplomatic Relations art. 31, Apr. 18, 1961, 23 U.S.T. 3227, 500 U.N.T.S. 95; Vienna Convention on Consular Relations art. 43, Apr. 24, 1963, 21 U.S.T. 77, 596 U.N.T.S. 261; Diplomatic Relations Act, Pub. L. No. 95-393, 92 Stat. 808 (1978).]]</p> <h2>Distinctions With a Difference</h2> <p>An entity&rsquo;s classification as a foreign state or political subdivision on the one hand, or as an agency or instrumentality on the other, is not mere semantics. It determines how the entity must be served and can even control the substantive immunity protections to which it is entitled under the FSIA.</p> <h3>Service of Process</h3> <p>Classifications matter from the outset of a case. Service on a foreign state or political subdivision is governed by Section 1608(a),[[N: 28 U.S.C. &sect; 1608(a); <em>see Gibbons v. Republic of Ireland</em>, 532 F. Supp. 668, 671 (D.D.C. 1982).]] which imposes an inflexible, hierarchical sequence of service methods: plaintiffs must first attempt service under any applicable international convention on service of judicial documents (or any special arrangement between the plaintiff and the state); if that fails, the clerk of court must dispatch the summons and complaint and a notice of suit (with translations) addressed to the head of the relevant ministry of foreign affairs; and if that also fails, the clerk may transmit documents through the U.S. Secretary of State via diplomatic channels.[[N:&nbsp;<em>See</em> 28 U.S.C. &sect; 1608(a)(1)-(4); <em>Republic of Sudan v. Harrison</em>, 587 U.S. 1, 4-5 (2019) (explaining that &sect; 1608(a) sets out &ldquo;in hierarchical order&rdquo; the methods for serving a foreign state or political subdivision).]] The service provisions for states and political subdivisions must be &ldquo;strict[ly]&rdquo; followed.[[N:&nbsp;<em>Harrison</em>, 587 U.S. at 19.]]</p> <p>By contrast, service on an agency or instrumentality is governed by Section 1608(b).[[N: 28 U.S.C. &sect; 1608(b).]] Although Section 1608(b) must also be closely followed, it is more flexible, resembles rules applicable to corporate defendants,[[N: Restatement (Fourth) of Foreign Relations Law &sect; 461 cmt. a.]] and allows for a broader range of service methods &mdash; including delivery to an authorized agent in the United States or certain other methods reasonably calculated to give actual notice.[[N:&nbsp;<em>Howe v. Embassy of Italy</em>, 68 F. Supp. 3d 26, 32 (D.D.C. 2014) (quoting 28 U.S.C. &sect; 1608(b)(3)).]]</p> <p>Cases can &mdash; and do &mdash; fail because of improper service under the FSIA.[[N:&nbsp;<em>See</em>, <em>e.g.</em>, <em>Harrison</em>, 587 U.S. at 4, 19 (reversing where the service packet was mailed to the foreign state&rsquo;s embassy rather than to the foreign minister&rsquo;s office in the foreign state); <em>Saint-Gobain Performance Plastics Europe v. Bolivarian Republic of Venezuela</em>, 23 F.4th 1036 (D.C. Cir. 2022) (finding service under &sect; 1608(a)(2) and the Hague Convention defective because Venezuelan law requires service on Attorney General, who was never served); <em>Magness v. Russian Fed&rsquo;n</em>, 247 F.3d 609, 611-13 (5th Cir. 2001) (finding service defective where plaintiff &ldquo;sen&amp;#91t&amp;#93 the summons and complaint directly to the Russian Deputy Minister of Culture&rdquo; rather than &ldquo;asking the clerk of the district court to send the summons and notice of suit&rdquo;); <em>Transaero</em>, 30 F.3d at 153-54 (vacating default judgment where plaintiff did not &ldquo;strict&amp;#91ly&amp;#93 adhere&amp;#91 &amp;#93 to the terms of &sect; 1608(a)&rdquo; in serving Bolivian Air Force, and &ldquo;actual notice&rdquo; of suit could not cure defective service); <em>Adetoro v. King Abdullah Acad.</em>, No. 1:19-cv-01918, 2019 WL 3457989, at *3 (D.D.C. July 30, 2019) (finding service &ldquo;not strictly compliant&rdquo; and therefore invalid where plaintiffs &ldquo;themselves mailed the documents rather than the clerk of the court&rdquo;).]] A plaintiff that serves the wrong type of defendant under the wrong provision may face a motion to dismiss for insufficient service of process or be forced to start the time-consuming service process anew.</p> <h3>Substantive Immunity Protections</h3> <p>Classifications also matter when plaintiffs invoke FSIA exceptions to immunity, as agencies and instrumentalities are subject to a slightly different set of immunity protections than foreign states and their political subdivisions. The so-called expropriation exception in Section 1605(a)(3) is a leading example. As we explained in our <a href="https://www.arnoldporter.com/en/perspectives/advisories/2021/01/can-you-be-sued-under-fsia" target="_self">January 2021 Advisory</a>, this provision strips certain foreign state entities of sovereign immunity when property is taken in violation of international law so long as that property has the requisite connection to the United States. For claims against the foreign state itself, a plaintiff generally must show that the expropriated property &mdash; or any property exchanged for it &mdash; is &ldquo;present in the United States in connection with [that state&rsquo;s] commercial activity carried on in the United States.&rdquo;[[N: 28 U.S.C. &sect; 1605(a)(3).]] For claims against an agency or instrumentality, the requirement is more relaxed: it is enough that the property be &ldquo;owned or operated&rdquo; by an agency or instrumentality that is engaged in commercial activity in the United States, regardless of whether that property is, in fact, used in connection with any U.S. commercial activity.[[N: 28 U.S.C. &sect; 1605(a)(3).]] The property itself need not be present in the United States. That asymmetry incentivizes some sovereign defendants to argue that they are the foreign state itself, rather than an agency or instrumentality, to invoke the more demanding standard of Section 1605(a)(3)&rsquo;s first clause.[[N: For example, in <em>Holtzman v. Kunstmuseen Krefeld</em>, a German municipal art museum moved to dismiss on the ground that it was part of the foreign state itself and thus immune from suit because the disputed paintings were not present in the United States. 805 F. Supp. 3d 368, 376 (D.D.C. 2025). The court rejected that argument, holding that the museum&rsquo;s core functions &mdash; exhibition, acquisition, and collection management &mdash; were commercial rather than governmental, and that the museum was therefore an agency or instrumentality subject to suit. <em>Id.</em> at 376-77.]] Conversely, some plaintiffs have sought to extend the more permissive second clause to the foreign state itself. The D.C. Circuit has repeatedly rejected that argument,[[N:&nbsp;<em>Agudas Chasidei Chabad of U.S. v. Russian Fed&rsquo;n</em>, 110 F.4th 242, 250 (D.C. Cir. 2024), <em>cert. denied</em>, No. 24-909, 2026 WL 135737 (U.S. Jan. 20, 2026); <em>Philipp v. Fed. Republic of Germany</em>, 894 F.3d 406, 414 (D.C. Cir. 2018), <em>vacated on other grounds and remanded</em>, 592 U.S. 169 (2021); <em>Schubarth v. Fed. Republic of Germany</em>, 891 F.3d 392, 401 (D.C. Cir. 2018); <em>de Csepel v. Republic of Hungary</em>, 859 F.3d 1094, 1107-08 (D.C. Cir. 2017).]] but the Ninth Circuit&rsquo;s position is less clear: it has upheld jurisdiction over foreign states even though only the second clause was met &mdash; though each time without providing any reasoning.[[N:&nbsp;<em>Altmann</em>, 317 F.3d at 968-69; <em>Cassirer v. Kingdom of Spain</em>, 616 F.3d 1019, 1022, 1028-34 (9th Cir. 2010) (en banc); <em>Sukyas v. Romania</em>, 765 F. App&rsquo;x 179, 180 (9th Cir. 2019). In <em>Cassirer</em>, the Ninth Circuit affirmed jurisdiction over Spain and its instrumentality based on the instrumentality&rsquo;s ownership of the expropriated property and its commercial activity in the United States, but without engaging in independent analysis of jurisdiction over Spain. 616 F.3d at 1028-34. Later, however, the United States explained that the parties and the court had erroneously assumed that jurisdiction over the instrumentality also supplied jurisdiction over Spain under Section 1605(a)(3)&rsquo;s second clause, and the plaintiffs then voluntarily dismissed Spain. <em>See</em> Brief for the United States as Amicus Curiae at 15-16, <em>Kingdom of Spain v. Estate of Cassirer</em>, No. 10-786, 2011 WL 2135028 (U.S. May 27, 2011); <em>Cassirer v. Thyssen-Bornemisza Collection Found.</em>, 737 F.3d 613, 617 (9th Cir. 2013).]]</p> <h3>Immunity From Attachment</h3> <p>Even if a plaintiff establishes jurisdiction and obtains a judgment, the FSIA separately shields sovereign property from attachment and execution absent a statutory exception.[[N: 28 U.S.C. &sect; 1610(a); Restatement (Fourth) of Foreign Relations Law &sect; 464 cmt. a.]] Here too, classifications matter. For property of a foreign state or political subdivision, creditors ordinarily must show that the specific property at issue is or was used for commercial activity in the United States.[[N: 28 U.S.C. &sect; 1610(a)(2).]] For property of an agency or instrumentality, additional statutory exceptions apply, and the standard is generally less demanding: a creditor need only show that the agency or instrumentality itself is generally engaged in commercial activity in the United States &mdash; not that the property sought to be attached is used for that purpose.[[N: 28 U.S.C. &sect; 1610(b). In cases brought under the FSIA&rsquo;s terrorism exception, however, the ordinary distinction between state property and agency property matters less. That is because Congress has authorized attachment of certain property of a foreign state&rsquo;s agencies or instrumentalities to satisfy a terrorism judgment against the state. <em>Id.</em> &sect; 1610(g)(1). That said, Section 1610(g) does not provide a freestanding basis for attachment and execution. <em>See Rubin v. Islamic Republic of Iran</em>, 583 U.S. 202, 218-19 (2018). Instead, a judgment holder must still identify an applicable immunity exception elsewhere in Section 1610. <em>See id.</em> at 212-13.]]</p> <h3>Damages and Venue</h3> <p>Agencies and instrumentalities can be held liable for punitive damages,[[N: 28 U.S.C. &sect; 1606.]] whereas foreign states and their political subdivisions generally cannot &mdash; except in limited cases defined by statute, such as certain terrorism claims.[[N: 28 U.S.C. &sect;&sect; 1605A(c), 1606.]] Some venue provisions differ for agencies and instrumentalities and for states: the FSIA subjects agencies and instrumentalities to suit wherever they are licensed to do business or are doing business, while foreign states and political subdivisions can always be sued in the District of Columbia.[[N: 28 U.S.C. &sect; 1391(f)(1), (3)-(4).]]</p> <h2>Conclusion</h2> <p>Whether a defendant is the foreign state itself, a political subdivision, or an agency or instrumentality is not always easy to determine. Courts have reached different conclusions about regulators, cultural institutions, and other affiliated entities, and judges do not always agree on the applicable tests. But the classification matters; a defendant&rsquo;s status triggers different rules for service, immunity, attachment, venue, and damages.</p> <p>Arnold &amp; Porter has represented foreign state clients &mdash; from every continent except Antarctica &mdash; in FSIA proceedings across the United States. Please contact us if you have questions about how any of these issues may arise in a particular matter.&nbsp;</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{8932012A-5C9B-4BCE-BE3B-0F460B98A17A}https://www.arnoldporter.com/en/perspectives/news/2026/08/chambers-again-recognizes-arnold-porter-as-a-leading-crisis-management-firmThe 2026 edition of <em>Chambers Crisis and Risk Management</em> named Arnold &amp; Porter as a top firm in this critical space. The guide ranks the leading crisis response and risk advisory professional services providers in key markets worldwide, featuring detailed coverage of core crisis and risk services across the United States, United Kingdom, and global markets based on independent research and evaluations conducted annually by <em>Chambers</em>. According to <em>Chambers</em>, Arnold &amp; Porter &ldquo;has an outstanding team of attorneys that they can deploy to address urgent matters.Tue, 11 Aug 2026 00:00:00 -0500<p>The 2026 edition of <em>Chambers Crisis and Risk Management</em> named Arnold &amp; Porter as a top firm in this critical space. The guide ranks the leading crisis response and risk advisory professional services providers in key markets worldwide, featuring detailed coverage of core crisis and risk services across the United States, United Kingdom, and global markets based on independent research and evaluations conducted annually by <em>Chambers</em>. According to <em>Chambers</em>, Arnold &amp; Porter &ldquo;has an outstanding team of attorneys that they can deploy to address urgent matters.&rdquo;</p> <p>Arnold &amp; Porter brings the broad experience to effectively manage the wide range of potential repercussions that an organization can face: criminal investigations, whether federal, state, or overseas; bet-the-company securities, product liability, or class-action litigation; congressional or regulatory investigations; and relentless media scrutiny. The firm has the depth and breadth to assemble the right team, the skills to devise an overarching strategy and defense, and the insights to give practical advice for every significant legal, reputational, and operational issue that arises, no matter the nature or scope of the crisis.</p>{D524A09C-D062-4BB5-B735-70D24651DDD8}https://www.arnoldporter.com/en/perspectives/news/2026/08/njbiz-names-paul-fishman-to-2026-law-power-listArnold &amp; Porter partner Paul Fishman has been named to <em>NJBIZ</em>'s 2026 Law Power list. The annual list recognizes New Jersey legal professionals whose leadership, professional accomplishments, and public service are helping shape the state's legal community and business landscape.Tue, 11 Aug 2026 00:00:00 -0500<p>Arnold &amp; Porter partner Paul Fishman has been named to <em>NJBIZ</em>'s 2026 Law Power list. The annual list recognizes New Jersey legal professionals whose leadership, professional accomplishments, and public service are helping shape the state's legal community and business landscape.</p> <p>Paul, who heads the firm's Crisis Management and Strategic Response team, was recognized for his distinguished legal career and leadership in both public and private practice. In his profile, Paul reflected on his tenure as U.S. attorney for the District of New Jersey, describing the opportunity to lead a team committed to exercising its authority with integrity as his proudest professional achievement.<em> NJBIZ</em> also highlighted Paul&rsquo;s perspective on the legal profession and his advice to the next generation of lawyers: to view practicing law as a privilege and use their skills to make a meaningful difference for clients and society.</p>{244EF1B0-AC06-45D9-9D26-AE5A5C5FE25A}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/08/stacey-halliday-speaks-to-corporate-counsel-on-california-recyclability-law<p>Arnold &amp; Porter Environmental partner Stacey Halliday was quoted in the <em>Corporate Counsel</em> article, &ldquo;Ruling Blocking California Law Shows Headwinds for State Sustainability Measures,&rdquo; which examines the federal court ruling temporarily blocking enforcement of a California law that would sharply restrict companies' ability to label packaging as recyclable and the broader implications for corporate sustainability compliance.</p>Mon, 10 Aug 2026 00:00:00 -0500<p>Arnold &amp; Porter Environmental partner Stacey Halliday was quoted in the <em>Corporate Counsel</em> article, &ldquo;Ruling Blocking California Law Shows Headwinds for State Sustainability Measures,&rdquo; which examines the federal court ruling temporarily blocking enforcement of a California law that would sharply restrict companies' ability to label packaging as recyclable and the broader implications for corporate sustainability compliance.</p> <p>While the preliminary injunction provides companies with temporary relief from the law's requirements, Stacey cautioned that businesses should continue preparing for compliance because the law remains on the books and the injunction's duration is uncertain. "I think we're still in a holding pattern," she said. "I would not change compliance plans. I would proceed into that uncertainty assuming that compliance will be mandatory, understanding that there may be options down the line."</p> <p>Stacey also noted that even if California's current law is ultimately struck down, companies should expect continued efforts to regulate recyclability claims. Restrictions could emerge through revised state legislation or at the federal level, where proposals have sought to bring greater consistency to the growing patchwork of state requirements.</p> <p><a href="https://www.law.com/corpcounsel/2026/08/06/ruling-blocking-california-law-shows-headwinds-for-state-sustainability-measures/">Read the full article</a> (subscription required).</p>{9527D5BB-0284-4C39-BF9B-F0C75B3B3D15}https://www.arnoldporter.com/en/perspectives/news/2026/08/latin-lawyer-recognizes-arnold-porter-mergers-acquisitions-lawyers-in-2025-deal-trackerArnold &amp; Porter partners Carlos Lobo and Marina Richter, senior associates Kristen Acosta and Claire Frost, and associate Jacob Saracino have been recognized in <em>Latin Lawyer</em>'s 2025 Deal Tracker, an annual ranking of the most active international lawyers advising on transactions across Latin America.Mon, 10 Aug 2026 00:00:00 -0500<p>Arnold &amp; Porter partners Carlos Lobo and Marina Richter, senior associates Kristen Acosta and Claire Frost, and associate Jacob Saracino have been recognized in <em>Latin Lawyer</em>'s 2025 Deal Tracker, an annual ranking of the most active international lawyers advising on transactions across Latin America.</p> <p>The following Arnold &amp; Porter lawyers were recognized among the most active international lawyers:</p> <ul> <li>Carlos Lobo&mdash;Mergers &amp; Acquisitions</li> <li>Marina Richter&mdash;Mergers &amp; Acquisitions</li> <li>Kristen Acosta&mdash;Mergers &amp; Acquisitions</li> <li>Claire Frost&mdash;Mergers &amp; Acquisitions</li> <li>Jacob Saracino&mdash;Mergers &amp; Acquisitions</li> </ul> <p>These recognitions underscore Arnold &amp; Porter's broad mergers and acquisitions capabilities in Latin America. The firm advises strategic and private equity clients on complex domestic, cross-border, and international mergers and acquisitions, business combinations, and joint venture transactions, drawing on integrated capabilities across tax, antitrust, benefits, litigation, and other complementary practices to help clients achieve their transaction objectives.</p>{DD7196F7-3685-4751-AA02-23B6471BA957}https://www.fdli.org/2026/08/upf-litigation-update-plaintiffs-causation-challenge-comes-into-sharper-focus/Jocelyn A. Wiesnerhttps://www.arnoldporter.com/en/people/w/wiesner-jocelyn-ajocelyn.wiesner@arnoldporter.comAnand Agneshwarhttps://www.arnoldporter.com/en/people/a/agneshwar-anandanand.agneshwar@arnoldporter.comMon, 10 Aug 2026 00:00:00 -0500{31B72890-E66B-4612-8B42-1C2B3A1AF6AE}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/china-compliance-update-life-sciences-summer-2026John Tanhttps://www.arnoldporter.com/en/people/t/tan-johnjohn.tan@cn.arnoldporter.comSiyi Guhttps://www.arnoldporter.com/en/people/g/gu-siyisiyi.gu@cn.arnoldporter.comChuqiao Yuhttps://www.arnoldporter.com/en/people/y/yu-chuqiaochuqiao.yu@cn.arnoldporter.com<p>The first half of 2026 saw continued expansion of China&rsquo;s compliance enforcement affecting life sciences companies, with anti-corruption remaining the primary regulatory focus alongside heightened scrutiny of medical data security, scientific research, public procurement, financial and tax compliance, and medical insurance fund integrity. New regulations governing medical representatives, updated judicial guidance lowering criminal liability thresholds for healthcare bribery, and increased enforcement actions &mdash; including unannounced inspections and enhanced credit evaluation penalties &mdash; underscore regulators&rsquo; expectations for stronger compliance programs, robust third-party oversight, and careful management of interactions with healthcare professionals, research activities, and government procurement processes.</p>Mon, 10 Aug 2026 00:00:00 -0500<p> <p>In the first half of 2026, anti-corruption enforcement in the life sciences industry remained a major focus for China&rsquo;s regulators. The life sciences sector also saw important developments in data security, public procurement, and management of sales representatives. This Advisory summarizes these developments and outlines compliance considerations for the new environment.</p> <h2>Enforcement Focus for 2026</h2> <p>On June 8, 2026, China&rsquo;s National Health Commission (NHC), together with 13 other government authorities,[[N:The 13 agencies include the Ministry of Commerce, the Ministry of Education, the Ministry of Finance, the Ministry of Industry and Information Technology, the Ministry of Public Security, the National Administration of Traditional Chinese Medicine, the National Audit Office, the National Disease Control and Prevention Administration, the National Healthcare Security Administration, the National Medical Products Administration, the State Administration for Market Regulation (SAMR), the State Taxation Administration, and the State-owned Assets Supervision and Administration Commission of the State Council (SASAC).]] published the <a rel="noopener noreferrer" href="https://www.nhc.gov.cn/ylyjs/zcwj/202606/76580b7730d841c7ae20cb081396f645.shtml" target="_blank">2026 Work Priorities for Rectifying Misconduct in the Field of Pharmaceutical Purchase and Sales and Medical Services</a> (the Work Priorities, 2026<span>年</span><span>纠正医药购销领域和医疗服务中不正之风工作要点</span>). The Work Priorities focus on recurring issues identified in recent years and set out regulatory expectations in 11 areas, including procurement, pricing, medical data, medical insurance, and delivery of healthcare services.</p> <h3>Medical Data Governance and Scientific Research Activities </h3> <p>For the first time, Article 5 of the Work Priorities elevates medical data security to a standalone priority. The Work Priorities call for strengthened, end-to-end oversight of medical data, including enhanced mechanisms for data use review and accountability, and explicitly prohibit the unauthorized disclosure, sale, or use of medical data. These measures are intended to reinforce protections for patient privacy and personal information.</p> <p>The same provision also highlights increased scrutiny of scientific research activities for improper transfers of value. As discussed in our <a href="https://www.arnoldporter.com/en/perspectives/advisories/2026/04/china-compliance-update-life-sciences-spring-2026" target="_self">April 2026 Advisory</a>, in March 2026, the National Healthcare Security Administration (NHSA) published a case study of an unannounced inspection of an investigator-initiated study (IIS) and discussed irregularities, including payments to Healthcare Professions (HCPs) that appeared to lack clinical value, additional IISs relating to the same drug with vague or overly broad clinical designs, and potentially questionable study deliverables. In the Work Priorities, regulators have further signaled a focus on misconduct involving the use of third parties to transfer improper benefits to HCPs under the guise of legitimate research. This emphasis suggests that authorities are expanding their focus beyond direct interactions between healthcare companies and HCPs to encompass more complex, indirect arrangements, including clinical trials and IIS.</p> <h3>HCP Conduct </h3> <p>Article 6 of the Work Priorities signals continued regulatory focus on HCP conduct. Regulators will target unauthorized multi-site practice, external consultations conducted without the required institutional approvals, and the use of academic activities as channels for the transfer of improper benefits. The Work Priorities also call for the continued implementation of the Nine Criteria for Honest Practices by Staff of Medical Institutions (<span>医</span><span>疗机构工作人员廉洁从业九项准则</span>) and related professional conduct requirements.</p> <h3>Medical Device Procurement</h3> <p>Article 7 of the Work Priorities signals continued regulatory focus on government procurement of medical devices. Regulators will target procurement-related misconduct, including improper intervention by key decision-makers, the splitting of projects to circumvent public tender requirements, bid specifications tailored to favor specific suppliers, and other forms of bid-rigging. Authorities also emphasized enforcement against suppliers engaging in license lending, sham transactions, and commercial bribery. </p> <p>Consistent with enforcement against &ldquo;rat race competition&rdquo; in other industries, the Work Priorities also call for resolution of the issue of abnormally low-priced bids in the public procurement of medical products and the issue of overdue payments owed by hospitals to suppliers. These priorities likely reflect regulators&rsquo; efforts to maintain a healthy and sustainable business environment in the life sciences industry.</p> <h3>Financial and Tax Compliance</h3> <p>Article 8 of the Work Priorities reflects enhanced regulatory attention to financial and tax-related misconduct, with particular emphasis on the medical device sector. The provision calls for coordinated and targeted enforcement of practices such as the falsification or alteration of tax invoices,[[N:Called &ldquo;fapiao&rdquo; in Chinese.]] issuance or acceptance of false tax invoices, and concealment of income to evade tax obligations. Notably, regulators will track entities that accept false tax invoices and enhance the credit evaluation mechanism in the medical device sector. These developments suggest that companies may face increased scrutiny not only of their internal financial controls, but also of tax invoices and financial documentation received from their distributors, vendors, and other third parties.</p> <h3>Medical Insurance Fund Integrity </h3> <p>Article 9 of the Work Priorities underscores a continued focus on safeguarding the integrity of funding for China&rsquo;s state-run medical insurance program through regulation of medical practices and the appropriate use of insurance funds. Regulators will continue to standardize diagnosis, treatment, and billing practices, while strengthening oversight and addressing key deficiencies in the management of the insurance program. </p> <h3>Misconduct by Industry Associations</h3> <p>Article 10 of the Work Priorities highlights concerns around the practices of healthcare industry associations, such as the lending of their qualifications to other entities, organization of meetings and operation of publications, business outsourcing, sponsorships, donations, and other forms of cooperation, which may be used to obtain improper benefits.</p> <h3>Medical Aesthetics</h3> <p>Article 10 also signals continued regulatory focus on the medical aesthetics sector. Regulators will target a range of industry misconduct, including the provision of medical aesthetic services without the required qualifications, the operation of &ldquo;fast-track&rdquo; training programs for minimally invasive medical aesthetic procedures, and false or misleading commercial marketing practices.</p> <h3>Targeted Enforcement Actions</h3> <p>The Work Priorities indicate that regulators will continue to rely on targeted enforcement campaigns and multi-agency investigations to address compliance risks across the healthcare sector. Specified areas of focus include tax-related misconduct in the medical device industry, medical practices, and the use of medical insurance funds. Regulators will also continue conducting targeted reviews of medical ethics and professional conduct, hospital inspections, and investigations into abnormal hospitalization expenses.</p> <h2>Administrative Measures for Medical Representatives</h2> <p>On April 28, 2026, the National Medical Products Administration (NMPA), together with six other central authorities, jointly issued the <a rel="noopener noreferrer" href="https://www.nmpa.gov.cn/xxgk/fgwj/xzhgfxwj/20260507180422166.html" target="_blank">Administrative Measures for Medical Representatives</a> (the Measures, <span>医</span><span>药代表管理办法</span>), which will take effect on August 1, 2026. The Measures are the final version of a draft that was published for public comment in late 2024. The Measures replace prior regulations issued in 2020 and represent a significant update to the regulatory regime for pharmaceutical sales representatives.</p> <p>The Measures tighten the requirements for sales representatives&rsquo; qualifications and impose new compliance obligations on sales representatives, market authorization holders (MAH), and contract sales organizations (CSO). While the Measures only apply to the pharmaceutical sector, the NMPA has announced that similar regulations for the medical device and medtech sector are forthcoming. For further analysis, see our Advisory on <a href="https://www.arnoldporter.com/en/perspectives/advisories/2026/06/china-strengthens-management-of-medical-representatives" target="_self">China&rsquo;s Administrative Measures for Medical Representatives</a>.</p> <p>The public disclosure mechanism established by the Measures may already be in use. Media reports indicate that on August 4, 2026, the national medical representative filing platform published its first disclosed violation since the Measures took effect, a finding that a sales representative had conducted academic promotional activities at a healthcare institution without first completing the required filing process. This listing, however, does not appear to be shown on the platform at the time of writing.</p> <h2>Interpretation (II) on Corruption and Bribery: Impact on Healthcare</h2> <p>On April 10, 2026, the Supreme People&rsquo;s Court (SPC) and the Supreme People&rsquo;s Procuratorate (SPP) jointly issued the <a rel="noopener noreferrer" href="https://www.court.gov.cn/fabu/xiangqing/497181.html" target="_blank">Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Corruption and Bribery (II)</a> (Interpretation (II), <span>关于</span><span>办理贪污贿赂刑事案件适用法律若干问题的解释（二）</span>), which took effect on May 1, 2026. This is the first major update to judicial guidance on this law in a decade. For further analysis, see our <a href="https://www.arnoldporter.com/en/perspectives/advisories/2026/04/china-compliance-update-anti-corruption-spring-2026" target="_self">China Compliance Update: Anti-Corruption &mdash; Spring 2026</a>.</p> <p>Interpretation (II) has three key implications for life sciences companies: </p> <ol> <li>Designates healthcare as a &ldquo;public-interest sector&rdquo; with correspondingly lower thresholds for criminal liability (RMB 100,000 (US$14,286) for individuals, RMB 200,000 (US$28,571) for entities). Under China&rsquo;s regulatory regime, lower levels of corrupt misconduct may be punished under the Anti-Unfair Competition Law, which is an administrative law. Interpretation (II) lowers the threshold at which corrupt misconduct in the life sciences sector will be punished criminally, rather than administratively. </li> <li>Lowers the thresholds for criminal liability for bribery of employees of private hospitals to bring them into line with the thresholds for public HCPs.</li> <li>Creates a clearer path to corporate liability by attributing employees&rsquo; corrupt misconduct to their employer if the illicit gains benefit the employer and the payment(s) were approved by senior management. </li> </ol> <h2>2026 NHSA Unannounced Inspections</h2> <p>On May 14, 2026, the NHSA formally launched the <a rel="noopener noreferrer" href="https://www.nhsa.gov.cn/art/2026/5/14/art_14_20502.html" target="_blank">2026 unannounced inspections</a> into the use of the national medical insurance fund. On July 9, 2026, the <a rel="noopener noreferrer" href="https://www.nhsa.gov.cn/art/2026/7/9/art_14_21357.html" target="_blank">NHSA reported</a> that in the first half of 2026, the NHSA had conducted unannounced inspections in all provinces of China, inspecting 2,926 medical institutions, and identifying RMB 1.16 billion in suspected noncompliant use of medical insurance funds. The 2026 inspections focus on areas with elevated risks of misusing medical insurance funding, high-risk therapeutic areas including orthopedics, hemodialysis, and laboratory testing, and institutions with major indications of noncompliance. </p> <p>In addition to focusing on misuse of the public medical insurance fund, the NHSA identified issues with investigator-initiated studies and public procurement process in prior unannounced inspections. See our <a href="https://www.arnoldporter.com/en/perspectives/advisories/2026/04/china-compliance-update-life-sciences-spring-2026" target="_self">China Compliance Update: Anti-Corruption &mdash; Spring 2026</a> for further analysis of the case studies published by the NHSA for prior unannounced inspections. </p> <h2>NHSA Alert on Expert Recommendations in VBP Programs</h2> <p>On July 7, 2026, the <a rel="noopener noreferrer" href="https://www.nhsa.gov.cn/art/2026/7/7/art_14_21332.html" target="_blank">NHSA published an alert</a> concerning improper interference with centralized volume-based procurement (VBP). During the selection of products for the twelfth round of national drug procurement, a multinational pharmaceutical company submitted a purported &ldquo;expert recommendation letter&rdquo; bearing the signatures of 78 doctors from 31 hospitals in an attempt to influence the selection process. The NHSA found that more than 80% of the signatures were falsified or obtained under false pretenses, including signatures forged by company sales personnel, copied from other materials, or attributed to non-existent HCPs. Some genuine signatures had reportedly been obtained under the guise of &ldquo;after-sales follow-up&rdquo; or &ldquo;research questionnaires.&rdquo; The NHSA warned companies not to interfere with centralized procurement through unlawful or non-compliant means. The NHSA did not state whether the implicated company was penalized.</p> <p>This is the first time that the NHSA has issued a public notice regarding issues with expert recommendations. Manufacturers participating in China&rsquo;s centralized procurement programs frequently collect recommendations from clinical experts in support of their applications. </p> <h2>Enforcement Case Studies</h2> <p>In the first half of 2026, the NHSA published three enforcement case studies. All three cases show that regulators are actively utilizing the <a rel="noopener noreferrer" href="https://www.nhsa.gov.cn/art/2025/6/5/art_104_16740.html" target="_blank">updated credit-evaluation mechanism promulgated in June 2025</a>[[N:For further analysis of the credit-evaluation mechanism, see our China Compliance Update: Life Sciences &mdash; Summer 2025. ]] as a penalty for commercial bribery in the life sciences sector.</p> <p> <table> <tbody> <tr> <td>No.</td> <td>Summary</td> <td>Notes</td> </tr> <tr> <td style="text-align: center; vertical-align: top;">1</td> <td style="text-align: left; vertical-align: top;"> <p>In <a rel="noopener noreferrer" href="https://www.nhsa.gov.cn/art/2026/7/28/art_14_21585.html" target="_blank">July 2026</a>, the NHSA published a criminal case in which an HCP at a public hospital in Henan province illegally accepted US$10,000 in cash, as well as shopping cards and other items of value totaling RMB 25,475,000 (US$3,639,286) from pharmaceutical and medical device distributors. </p> <span>The HCP was sentenced to 11 years in prison and fined RMB 2,300,000 (US$328,571). The illegal proceeds of RMB 25,475,000 (US$3,639,286) and US$10,000 were confiscated.</span></td> <td style="text-align: left; vertical-align: top;"><span>Regulators conducted updated credit evaluations of the implicated distributors and manufacturers. Distributors were encouraged to provide evidence identifying the manufacturers. All 10 manufacturers implicated received some degree of &ldquo;dishonest&rdquo; rating. Some of the manufacturers corrected their misconduct by submitting reports documenting their remediation measures, reducing inflated pricing margins, and returning improper gains. Three manufacturers refused to correct their conduct and have been subjected to unspecified additional restrictions.</span></td> </tr> <tr> <td style="text-align: center; vertical-align: top;">2</td> <td style="text-align: left; vertical-align: top;"> <p>In <a rel="noopener noreferrer" href="https://www.nhsa.gov.cn/art/2026/4/9/art_14_20143.html" target="_blank">April 2026</a>, the NHSA published a criminal case in which an HCP at a public hospital in Qinghai province with a leadership role accepted bribes from a pharmaceutical manufacturer and a medical device manufacturer.</p> <span>The HCP was convicted of accepting bribes and sentenced to three years in prison and fined RMB 300,000 (US$42,857). Penalties imposed on the implicated companies, if any, have not been publicly disclosed.</span></td> <td style="text-align: left; vertical-align: top;"> <p>The findings triggered a credit-evaluation process against the implicated manufacturers.</p> <p>One company remedied its misconduct before the official credit evaluation result was issued and did not receive a negative evaluation.</p> <p>The other company failed to take any remedial action, received an &ldquo;Extremely Dishonest&rdquo; evaluation, and was debarred from public procurement in Qinghai province for three years.</p> </td> </tr> <tr> <td style="text-align: center; vertical-align: top;">3</td> <td style="text-align: left; vertical-align: top;"> <p>In <a rel="noopener noreferrer" href="https://www.nhsa.gov.cn/art/2026/1/11/art_14_19315.html" target="_blank">January 2026</a>, the NHSA published a case in which a CSO was engaged by a distributor to promote an injectable product. The CSO&rsquo;s sales director paid RMB 35,046 (US$5,007) in kickbacks to a public HCP in exchange for increased prescriptions.</p> <span>The CSO was fined RMB 300,000 (US$42,857) for commercial bribery under Article 7 of the Anti-Unfair Competition Law.</span></td> <td style="text-align: left; vertical-align: top;"><span>The findings triggered the credit-evaluation process against the distributor. The distributor was required to identify the manufacturer responsible for the misconduct. The manufacturer was also subjected to the credit-evaluation process, although the NHSA did not publish the results of the manufacturer&rsquo;s credit evaluation.</span></td> </tr> </tbody> </table> </p> <h2>Takeaways</h2> <p> <p style="margin-bottom: 12pt; line-height: normal;">As Chinese regulators continue to prioritize enforcement across multiple facets of the life sciences industry, companies operating in China should proactively assess their compliance posture.&nbsp;</p> <ol> <li style="margin-bottom: 12pt; line-height: normal;">Anti-corruption enforcement in the life sciences sector remains a major focus for regulators. Companies should continue to look closely at high-risk areas such as sponsorships or donations to healthcare organizations, academic conferences and medical education programs, and HCP engagements such as consulting arrangements and speaker programs. These arrangements should be supported by legitimate business or academic needs, appropriate approvals, fair-market-value assessments, and adequate documentation.</li> <li style="margin-bottom: 12pt; line-height: normal;">Medical insurance fraud remains another area of enforcement focus. With the launch of the NHSA&rsquo;s 2026 unannounced inspection program, we expect to see more enforcement cases and potentially increased scrutiny on manufacturers relating to public procurement and interactions with public hospitals and HCPs.</li> <li style="margin-bottom: 12pt; line-height: normal;">Regulators are also paying close attention to other areas, including medical data security, scientific research activities, medical device procurement, financial and tax compliance, and medical aesthetics.</li> <li style="margin-bottom: 12pt; line-height: normal;">Companies should review their compliance training programs and policies and procedures to ensure they are aligned with regulators&rsquo; changing priorities. </li> <li style="margin-bottom: 12pt; line-height: normal;">Increasing enforcement against companies for their distributors&rsquo; misconduct highlights the importance of strong third-party due diligence and monitoring programs.</li> </ol> </p> <p>* <em>Xuan Chen contributed to this Advisory. Xuan is employed as a China Associate in Arnold &amp; Porter&rsquo;s Shanghai office</em>.</p> </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{6E8FEBB7-D51B-4081-93BF-E9CBF81717F7}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/capital-snapshot-august-2026Eugenia E. Piersonhttps://www.arnoldporter.com/en/people/p/pierson-eugenia-eEugenia.Pierson@arnoldporter.comAllison Jarushttps://www.arnoldporter.com/en/people/j/jarus-allisonallison.jarus@arnoldporter.comPeter E. Duysharthttps://www.arnoldporter.com/en/people/d/duyshart-peterpeter.duyshart@arnoldporter.comEmily Crawfordhttps://www.arnoldporter.com/en/people/c/crawford-emilyemily.crawford@arnoldporter.comEmily Mahaffyhttps://www.arnoldporter.com/en/people/m/mahaffy-emilyemily.mahaffy@arnoldporter.comDylan L. Kelemenhttps://www.arnoldporter.com/en/people/k/kelemen-dylan-ldylan.kelemen@arnoldporter.com<span style="color: #494949; background-color: #fefefe;">Our Legislative &amp; Public Policy team is pleased to provide the August 2026 edition of </span><em style="color: #494949; background-color: #fefefe; margin: 0px; padding: 0px; border: 0px; line-height: inherit;">Capital Snapshot</em><span style="color: #494949; background-color: #fefefe;">, which includes a monthly summary of the issues, events, and timelines driving federal policy and political decisions. This month&rsquo;s edition of the </span><em style="color: #494949; background-color: #fefefe; margin: 0px; padding: 0px; border: 0px; line-height: inherit;">Capital Snapshot</em><span style="color: #494949; background-color: #fefefe;"> contains a review of the landscape of the 119th Congress, including upcoming congressional schedules and key dates, and recently-announced retirements, resignations, vacancies, and candidacies. We also share updates pertaining to the FY 2027 federal funding and the appropriations processes, including the recently passed Senate continuing resolution. Our team also provides comprehensive updates on the latest on trade and tariffs.</span>Mon, 10 Aug 2026 00:00:00 -0500<p>Our Legislative &amp; Public Policy team is pleased to provide the August 2026 edition of <em>Capital Snapshot</em>, which includes a monthly summary of the issues, events, and timelines driving federal policy and political decisions. This month&rsquo;s edition of the <em>Capital Snapshot</em> contains a review of the landscape of the 119th Congress, including upcoming congressional schedules and key dates, and recently-announced retirements, resignations, vacancies, and candidacies. We also share updates pertaining to the FY 2027 federal funding and the appropriations processes, including the recently passed Senate continuing resolution. Our team also provides comprehensive updates on the latest on trade and tariffs. Furthermore, we share some salient legislative and policy updates across a variety of additional key policy areas, including: (1) defense; (2) tax; (3) financial services; (4) artificial intelligence; (5) technology; (6) data privacy; (7) health care; (8) education; and (9) energy and environment. Additionally, we provide an overview and outlook of the upcoming 2026 midterm elections in November, as well as an update to the latest primaries across the country. Our team also takes a look at current public opinion polling on President Trump&rsquo;s job performance and policy priorities, and assesses economic factors and conditions that could impact the future political landscape in an election year.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{97C5F2A9-D4AD-4BDD-B2BC-0A0509BC8BFC}https://www.arnoldporter.com/en/perspectives/news/2026/08/india-business-law-journal-recognizes-arnold-porter-in-2026-foreign-law-firm-report<p>Arnold &amp; Porter has been recognized by <em>India Business Law Journal,</em> in the "Significant Players" category as part of the publication&rsquo;s 2026 Foreign Law Firm Report. The report highlighted Arnold &amp; Porter for its work on &ldquo;cutting-edge AI,&rdquo; and team members were commended for having &ldquo;an instinctive understanding of the deep connections that determine how decision-making in India truly works.&rdquo; It recognizes the work done by Arnold &amp; Porter advising Indian companies across a variety of industries.</p>Fri, 07 Aug 2026 00:00:00 -0500<p>Arnold &amp; Porter has been recognized by <em>India Business Law Journal,</em> in the "Significant Players" category as part of the publication&rsquo;s 2026 Foreign Law Firm Report. The report highlighted Arnold &amp; Porter for its work on &ldquo;cutting-edge AI,&rdquo; and team members were commended for having &ldquo;an instinctive understanding of the deep connections that determine how decision-making in India truly works.&rdquo; It recognizes the work done by Arnold &amp; Porter advising Indian companies across a variety of industries.</p> <p><em>India Business Law Journal</em> noted Arnold &amp; Porter&rsquo;s continued investment in its India practice and its multidisciplinary team, which advises clients on complex cross-border transactions, disputes, investigations, regulatory matters, and intellectual property issues. </p> <p>The Foreign Law Firm report is based on research covering more than 600 law firms worldwide that handled India-related matters over the past year. According to the <em>India Business Law Journal</em>, firms were evaluated through submissions, editorial research, public records, news reports, and feedback from in-house counsel and Indian law firms.</p>{11E81445-64F9-4606-9166-405F1CAF5A06}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/federal-court-permanently-enjoins-prop-65-cancer-warnings-for-dea-in-cosmeticsDania Qahoushhttps://www.arnoldporter.com/en/people/q/qahoush-daniadania.qahoush@arnoldporter.comAngel Tang Nakamurahttps://www.arnoldporter.com/en/people/n/nakamura-angel-tangangel.nakamura@arnoldporter.comZachary Faynehttps://www.arnoldporter.com/en/people/f/fayne-zacharyzachary.fayne@arnoldporter.com<p>A recent federal court decision permanently bars the California Attorney General from enforcing Proposition 65&rsquo;s cancer warning requirement for diethanolamine in cosmetics and personal care products, marking the fourth successful First Amendment challenge to a Proposition 65 warning based on disputed scientific evidence. The ruling reinforces a growing judicial trend limiting compelled warnings where the underlying science remains contested and provides industry groups with an increasingly established roadmap for challenging similar Proposition 65 requirements, while signaling continued scrutiny of warning obligations based solely on International Agency for Research on Cancer classifications.</p>Fri, 07 Aug 2026 00:00:00 -0500<p>A federal court in the Eastern District of California has permanently barred the California Attorney General from enforcing Proposition 65&rsquo;s cancer warning requirement for diethanolamine (DEA) in cosmetics and personal care products. The order, entered June 23, 2026, in <em>The Personal Care Products Council v. Bonta</em>, is the fourth time in recent years that a federal court has enjoined a requirement to provide Proposition 65 warnings on First Amendment grounds, following earlier victories involving glyphosate, acrylamide, and titanium dioxide. Industry groups now have a fairly consistent playbook for attacking Proposition 65 warnings based on disputed science, and the state&rsquo;s Attorney General is increasingly declining to defend against such challenges.</p> <h2>Background</h2> <p>Proposition 65 requires businesses to warn before knowingly exposing anyone in California to a chemical the state has listed as &ldquo;known to the state to cause cancer or reproductive toxicity.&rdquo; Cal. Health &amp; Safety Code &sect; 25249.6. Under the so-called &ldquo;Labor Code mechanism,&rdquo; if the International Agency for Research on Cancer (IARC) classifies a chemical as a known human carcinogen, or a probable or possible human carcinogen with &ldquo;sufficient evidence&rdquo; of carcinogenicity in animals, California&rsquo;s Office of Environmental Health Hazard Assessment (OEHHA) must automatically add it to the Proposition 65 list, without any independent scientific review. Penalties for noncompliance can reach $2,500 per violation, per day. Proposition 65 also allows private citizens &ldquo;acting in the public interest&rdquo; to file lawsuits to enforce the warning requirement, so long as they first serve a 60-day notice of violation on the business, the Attorney General, and local prosecutors. If none of those officials elects to file a suit in that window, the private plaintiff can step into the shoes of the state and proceed on the state&rsquo;s behalf. Private plaintiffs have strong incentives to pursue such claims because they are entitled to keep a share of the penalties ultimately recovered. Indeed, a substantial majority of Proposition 65 suits are brought by private citizens rather than the Attorney General.</p> <p>DEA is an organic compound used as a surfactant, emulsifier, and pH adjuster in a wide range of consumer products, including shampoos, conditioners, hair gels and dyes, shaving gels, makeup, lotions, and sunscreens. It was added to the Proposition 65 list in June 2012 after IARC concluded that DEA was &ldquo;possibly carcinogenic to humans.&rdquo; Notably, neither OEHHA nor any federal or California state agency has ever independently concluded that DEA is linked to cancer in humans.</p> <h2>The PCPC Lawsuit Challenging DEA&rsquo;s Inclusion in Prop 65 List</h2> <p>The Personal Care Products Council (PCPC), the trade association for cosmetics and personal care product manufacturers, sued Attorney General Rob Bonta in March 2026 under 42 U.S.C. &sect; 1983, arguing that a Proposition 65 warning regarding DEA was based on only a single study that found a possible cancer link in a strain of mice known to be particularly prone to cancer. PCPC argued that this warning requirement forces its members to make false and misleading statements about their DEA-containing products.</p> <p>The PCPC case follows a similar legal theory to the glyphosate case (<em>National Association of Wheat Growers v. Bonta</em>), the acrylamide case (<em>California Chamber of Commerce v. Bonta</em>), and PCPC&rsquo;s own earlier titanium dioxide case (<em>Personal Care Products Council v. Bonta</em>), in which industry groups challenged Proposition 65&rsquo;s warning requirements as unconstitutional compelled speech under the First Amendment, on the theory that a warning resting on unsettled or contested science cannot be purely factual or uncontroversial. Government-mandated commercial disclosures ordinarily need only be &ldquo;purely factual and uncontroversial&rdquo; to survive a relaxed form of First Amendment review that applies specifically to disclosure requirements, rather than the more stringent scrutiny that governs other compelled or restricted commercial speech. <em>Zauderer v. Office of Disciplinary Counsel of the Supreme Court of Ohio</em>, 471 U.S. 626, 651 (1985). A warning ceases to be purely factual when it asserts a health risk that is not fully established in the scientific community. Where the science is not well established, courts apply the more stringent intermediate scrutiny standard, which requires the government to show that the compelled speech directly advances a substantial interest without being broader than necessary. <em>Nat&rsquo;l Ass&rsquo;n of Wheat Growers v. Bonta</em>, 85 F.4th 1263, 1283 (9th Cir. 2023) (applying <em>Central Hudson Gas &amp; Electric Corp. v. Public Service Commission of New York</em>, 447 U.S. 557, 566 (1980)).</p> <p>PCPC&rsquo;s complaint made three linked arguments with respect to the DEA warning. First, the warning is not a neutral fact but a compelled false statement &mdash; it requires businesses to tell customers that a product can expose them to a chemical known to cause cancer, which PCPC argued is not true. Second, the science behind adding DEA to the Proposition 65 list is too thin because it is based only on a single study in a cancer-prone mouse strain. A parallel rat study did not find the same link, and no human study has independently concluded that DEA is linked to cancer in humans. Third, because the warning is not purely factual and uncontroversial, the more lenient <em>Zauderer</em> standard does not apply, and the warning also fails the more stringent level of First Amendment scrutiny because the state has no legitimate interest in forcing a false or misleading warning on a product label.</p> <h2>Impact of the Order</h2> <p>Rather than litigate the case to a merits ruling, Attorney General Bonta and PCPC entered into a stipulated judgment. Judge Daniel J. Calabretta of the Eastern District of California, Sacramento Division, signed the resulting Order Regarding Final Judgment and Permanent Injunction on June 23, 2026. The Order provides the following relief:</p> <ul> <li>Permanently enjoins the Attorney General, and anyone acting in privity or concert with him, from filing or prosecuting new Proposition 65 suits over DEA in cosmetics and personal care products</li> <li>Declares that, given the current state of the science, the Proposition 65 cancer warning requirement for DEA cannot be enforced consistent with the First Amendment</li> <li>Allows the Attorney General to move under Rule 60(b)(5) or (6) to dissolve the injunction if the facts or the law change</li> <li>Keeps the case open so the court can enforce the injunction going forward</li> <li>Enters judgment for PCPC, with each side covering its own fees and costs</li> </ul> <p>Notably, Attorney General Bonta did not concede the constitutional argument. The stipulation states he still disputes that the DEA warning violates the First Amendment, but explains that both sides evaluated the current science, the reasoning courts used in the glyphosate, acrylamide, and titanium dioxide cases, and the governing precedent, and concluded that a stipulated judgment was the sensible way to resolve the case.</p> <h2>Practical Takeaways</h2> <p>The injunction is limited to DEA in cosmetics and personal care products and does not cover DEA exposures posed by other products. But within that scope, the injunction should bar both AG-led enforcement and the private citizen enforcement suits that make up the bulk of actual Proposition 65 litigation. </p> <p>Read alongside the glyphosate, acrylamide, and titanium dioxide cases, the DEA order gives industry groups an established blueprint to challenge Proposition 65 warning requirements. When a chemical is listed under Proposition 65 based solely on an IARC determination that the chemical is a &ldquo;probable&rdquo; or &ldquo;possible&rdquo; carcinogen without direct evidence that the chemical is linked to cancer in humans, industry groups will likely sue, and a federal court &mdash; or the state itself, by stipulation &mdash; could conclude that the warning is based on evidence too shaky to survive First Amendment scrutiny. We expect industry groups to continue challenging chemicals on the Proposition 65 list that fall into this category.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{868DC019-585B-43DA-8D86-C09A2DA83858}https://www.biosliceblog.com/2026/08/how-will-the-eu-parliament-shape-the-mdr-ivdr-revision-draft-report-indicates-how-parliament-may-seek-to-amend-commissions-proposals/Fabien Royhttps://www.arnoldporter.com/en/people/r/roy-fabienfabien.roy@arnoldporter.comChristopher Bateshttps://www.arnoldporter.com/en/people/b/bates-christopherchristopher.bates@arnoldporter.comSofia Holmquisthttps://www.arnoldporter.com/en/people/h/holmquist-sofiasofia.holmquist@arnoldporter.comThu, 06 Aug 2026 00:00:00 -0500{07D4A416-E55A-4DEA-9D1E-9F4632BEE0BF}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/08/daily-journal-features-joel-greenberg-and-sara-adler-on-the-secs-extended-hours-trading-proposal<p>Joel Greenberg, senior counsel, and Sara Adler, counsel, of Arnold &amp; Porter&rsquo;s Corporate &amp; Finance practice, were quoted in the <em>Daily Journal</em> article, &ldquo;The Market That Never Sleeps,&rdquo; on the Securities and Exchange Commission's (SEC) upcoming roundtable to discuss moving toward 24-hour trading in the U.S. equity markets.</p>Wed, 05 Aug 2026 00:00:00 -0500<p>Joel Greenberg, senior counsel, and Sara Adler, counsel, of Arnold &amp; Porter&rsquo;s Corporate &amp; Finance practice, were quoted in the <em>Daily Journal</em> article, &ldquo;The Market That Never Sleeps,&rdquo; on the Securities and Exchange Commission's (SEC) upcoming roundtable to discuss moving toward 24-hour trading in the U.S. equity markets.</p> <p>Sara discussed the regulatory timeline for implementing extended-hours trading, noting that Nasdaq&rsquo;s new 23-hour-a-day, 5-day-a-week systems could become operational as early as December, pending final SEC approval. She also acknowledged that while longer trading hours will introduce new operational and market risks for exchanges, public companies, and investors, established exchanges and SEC oversight should help mitigate many of those concerns.</p> <p>Joel explained that investor demand for near-continuous access to the markets has been building for years, observing that "there's so much pressure to trade outside of normal hours that people find a way." He noted that trading already occurs through alternative venues but emphasized that national securities exchanges would provide greater efficiency and transparency for investors. Highlighting the increasing pace of global information flow, Joel added, "They're going to do it because we have been&mdash;in for the past 10 or 20 years&mdash;in an environment where traders get enough of an information flow where they want to react instantly to news." Looking ahead, he observed that the SEC may need to expand the availability of its EDGAR filing system to ensure investors have timely access to material disclosures whenever markets are open, concluding, "It's going to happen. There's a lot to be figured out."</p> <p><a href="https://www.dailyjournal.com/articles/393415-the-market-that-never-sleeps">Read the full article</a>.</p>{6F4FC32B-4DF3-4C5B-85F0-7E86D0ACCD9A}https://www.arnoldporter.com/en/perspectives/news/2026/08/sheila-boston-receives-margaret-brent-women-lawyers-of-achievement-awardThe American Bar Association (ABA) Commission on Women in the Profession presented Arnold &amp; Porter partner Sheila S. Boston with its 2026 Margaret Brent Women Lawyers of Achievement Award on August 2, at the ABA Annual Meeting in Chicago.Wed, 05 Aug 2026 00:00:00 -0500<p>The American Bar Association (ABA) Commission on Women in the Profession presented Arnold &amp; Porter partner Sheila S. Boston with its 2026 Margaret Brent Women Lawyers of Achievement Award on August 2, at the ABA Annual Meeting in Chicago.</p> <p>The Margaret Brent Women Lawyers of Achievement Award recognizes women lawyers "who have achieved professional excellence in their area of specialty and have actively paved the way to success for others." Each year, the ABA Commission on Women in the Profession presents the award to up to five women lawyers who have achieved professional excellence and paved the way for other women in the legal profession.</p> <p>The ABA commended Sheila as "a seasoned trial lawyer and litigation strategist who defends clients from the initiation of a case through trial and resolution." The organization also noted she is active in bar associations and currently serves as vice president of the Federal Bar Council. She previously served as president of the New York City Bar Association, for which she was the first woman of color to hold the role.</p> <p>Established in 1991, the Margaret Brent Women Lawyers of Achievement Award is named for Margaret Brent, the first woman lawyer in America. Past honorees include U.S. Supreme Court justices, legislators, scholars, civil rights activists, and corporate lawyers. Winners are selected based on "their professional accomplishments and their role in opening doors of opportunity for other women lawyers."</p> <p>The honor follows a series of recent recognitions for Sheila, who earlier this year was named to <em>Forbes'</em> inaugural <a href="/en/perspectives/news/2026/06/forbes-names-2026-americas-top-women-lawyers-list">America's Top Women Lawyers</a>&nbsp;list and <em>Crain&rsquo;s New York Business&rsquo;s&nbsp;<a href="/en/perspectives/news/2026/03/crains-new-york-business-names-sheila-boston-melida-hodgson-and-jami-vibbert">&lsquo;Notable Women in Law&rsquo;</a>&nbsp;</em>List. Last year, the New York City Bar Association honored her with a <a href="/en/perspectives/news/2025/11/new-york-city-bar-association-honors-sheila-boston">historic portrait unveiling</a>, and the National Bar Association recognized her as one of its <a href="/en/perspectives/news/2025/08/sheila-boston-receives-honors-at-nba-centennial-convention">Centennial Lawyers of Distinction</a>.</p>{14201E31-DEE8-4E42-AD65-550B2F70F760}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/08/law360-interviews-lisa-re-on-cms-new-exclusion-authorityLisa Re, Arnold &amp; Porter Life Sciences &amp; Healthcare Regulatory partner and former Assistant Inspector General for Legal Affairs at the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG), was quoted in the recent<em> Law360</em> article, &ldquo;Lawyers Eye CMS&rsquo; New Power To Freeze Medicaid Funds,&rdquo; discussing the implications of HHS expanding exclusion authority to the Centers for Medicare &amp; Medicaid Services (CMS).Wed, 05 Aug 2026 00:00:00 -0500<p>Lisa Re, Arnold &amp; Porter Life Sciences &amp; Healthcare Regulatory partner and former Assistant Inspector General for Legal Affairs at the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG), was quoted in the recent <em>Law360</em> article, &ldquo;Lawyers Eye CMS&rsquo; New Power To Freeze Medicaid Funds,&rdquo; discussing the implications of HHS expanding exclusion authority to the Centers for Medicare &amp; Medicaid Services (CMS).</p> <p>Because OIG has typically handled exclusion authority, Lisa emphasized that CMS&rsquo; new role could strengthen the government's healthcare fraud enforcement efforts.</p> <p>&ldquo;This is going to be a force multiplier,&rdquo; she said.</p> <p>She also noted that the expanded authority raises questions about how exclusion responsibilities will be divided between OIG and CMS, including whether the agencies will share authority or focus on different types of exclusions.</p> <p>&ldquo;It all depends on how they write it in the delegation,&rdquo; Lisa said. &ldquo;The devil&rsquo;s in the details there.&rdquo;</p> <p><a href="https://www.law360.com/healthcare-authority/articles/2505069?">Read the full article</a> (subscription required).</p>{7C3A181C-ED1F-4EE2-A78A-DECB775F987A}https://www.arnoldporter.com/en/perspectives/news/2026/08/law360-names-tom-pettit-to-2026-rising-stars-listArnold &amp; Porter Government Contracts senior associate Tom Pettit was named to<em> Law360's </em>2026 list of "Rising Stars." The annual report recognizes attorneys under 40 "whose legal accomplishments belie their age." Honorees were selected based on their career accomplishments in their respective disciplines.Wed, 05 Aug 2026 00:00:00 -0500<p>Arnold &amp; Porter Government Contracts senior associate Tom Pettit was named to<em> Law360's</em> 2026 list of "Rising Stars." The annual report recognizes attorneys under 40 "whose legal accomplishments belie their age." Honorees were selected based on their career accomplishments in their respective disciplines.</p> <p>Tom represents government contractors across industries in litigation, including bid protests, contract claims, and prime-subcontractor disputes before the U.S. Government Accountability Office, U.S. Court of Federal Claims, U.S. Court of Appeals for the Federal Circuit, Boards of Contract Appeals, Small Business Administration Office of Hearings and Appeals, and other forums. He also advises companies on mergers and acquisitions involving government contractors; represents government contractors in internal and government investigations; and advises government contractors on a variety of regulatory compliance issues, including cybersecurity and small business matters. Tom is a U.S. Marine Corps veteran of Operation Iraqi Freedom. He is well-versed in the needs and concerns of the defense, aerospace, intelligence, and national security communities.</p>{82C5F22D-910A-470E-A885-FC80233201B5}https://www.biosliceblog.com/2026/08/the-eu-data-acts-access-by-design-deadline-what-life-sciences-companies-need-to-know-before-september-2026/Alexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comFabien Royhttps://www.arnoldporter.com/en/people/r/roy-fabienfabien.roy@arnoldporter.comCamille Vermosenhttps://www.arnoldporter.com/en/people/v/vermosen-camillecamille.vermosen@arnoldporter.comWed, 05 Aug 2026 00:00:00 -0500{E2478A73-C522-4BAE-A7FE-0E84F658F49C}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/08/stacey-halliday-and-jennifer-kwapisz-talk-to-inside-epa-about-oregon-california-epr-lawsArnold &amp; Porter Environmental partner Stacey Halliday and Product Liability Litigation partner Jennifer Kwapisz were quoted in the recent<em> Inside EPA </em>article, &ldquo;Briefing On Due Process Claims Could Limit Impact Of Oregon EPR Suit,&rdquo; discussing Judge Michael Simon&rsquo;s order for post-trial briefing in <em>National Association of Wholesaler-Distributors (NAW) v. Feldon,</em> the first extended producer responsibility (EPR) lawsuit to go to trial.Tue, 04 Aug 2026 00:00:00 -0500<p>Arnold &amp; Porter Environmental partner Stacey Halliday and Product Liability Litigation partner Jennifer Kwapisz were quoted in the recent <em>Inside EPA</em> article, &ldquo;Briefing On Due Process Claims Could Limit Impact Of Oregon EPR Suit,&rdquo; discussing Judge Michael Simon&rsquo;s order for post-trial briefing in <em>National Association of Wholesaler-Distributors (NAW) v. Feldon,</em> the first extended producer responsibility (EPR) lawsuit to go to trial.</p> <p>Jennifer highlighted that if the judge&rsquo;s ruling ultimately focuses on NAW&rsquo;s Commerce Clause claims rather than due process arguments, the impact will be broader.</p> <p>In that case, &ldquo;it&rsquo;s likely to have more far-ranging implications, because all these packaging EPR programs are having a somewhat similar impact on the stream of commerce,&rdquo; she said.</p> <p>To prove its Commerce Clause claims, NAW would need to show the practical import of the EPR program on interstate commerce, which Jennifer noted may be difficult.</p> <p>&ldquo;The dormant Commerce Clause is a challenging area of the law, and it&rsquo;s not entirely clear from Supreme Court precedent just what quantum of evidence is going to be needed to satisfy the standard,&rdquo; she said.</p> <p>Stacey emphasized that because the court is likely to act quickly, the decision could have implications for California&rsquo;s similar packaging EPR program, while the impacts on other states may be more limited.</p> <p>&ldquo;Implementation will likely just be in a wait-and-see mode,&rdquo; she said, in reference to other states&rsquo; packaging EPR programs that are in earlier stages.</p> <p><a href="https://insideepa.com/daily-news/briefing-due-process-claims-could-limit-impact-oregon-epr-suit?0=ip_login_no_cache%3D1a886bdaada746f0e3361343de0b0769">Read the full article</a> (subscription required).</p>{49FD8449-ECC2-4430-BF91-7C3E9198D3DE}https://www.arnoldporter.com/en/perspectives/news/2026/08/arnold-porter-welcomes-ma-private-equity-partner-chee-kwan-kim-to-seoul-office<strong>SEOUL and WASHINGTON, D.C., August 3, 2026</strong> &mdash; Arnold &amp; Porter announced today that Chee-Kwan Kim has joined the firm&rsquo;s M&amp;A team of its Corporate &amp; Finance practice as a partner. CK will be resident in the firm&rsquo;s Seoul office.Mon, 03 Aug 2026 00:00:00 -0500<p><strong>SEOUL and WASHINGTON, D.C., August 3, 2026</strong> &mdash; Arnold &amp; Porter announced today that Chee-Kwan Kim has joined the firm&rsquo;s M&amp;A team of its Corporate &amp; Finance practice as a partner. CK will be resident in the firm&rsquo;s Seoul office.&nbsp;</p> <p>James K. Lee, Managing Partner of Arnold &amp; Porter&rsquo;s Seoul office, said: &ldquo;CK is well regarded in both the business and legal community as an excellent U.S.-qualified lawyer and a trusted advisor whom clients turn to for their most complex transactions. We are confident his business acumen and experience in M&amp;A and private equity will meaningfully augment our existing capabilities in the Korean market.&rdquo;&nbsp; </p> <p>Derek Stoldt, co-chair of Arnold &amp; Porter&rsquo;s Corporate &amp; Finance Group, added: &ldquo;Outbound M&amp;A from Korea remains active and increasingly complex, often involving significant regulatory considerations and cross-jurisdictional structuring and coordination. CK&rsquo;s experience with private equity &mdash;&nbsp;which continues to drive M&amp;A activity in Korea &mdash;&nbsp;positions him to collaborate effectively with our U.S. and global multidisciplinary teams to advise large corporations investing internationally on Korea-originated deal flow.&rdquo;&nbsp; </p> <p>CK brings nearly two decades of experience counseling clients on complex, high-value, cross-border mergers and acquisitions, as well as private equity investments. He often represents Korean corporations and sponsors in their strategic transactions, with a particular focus on outbound investments. He regularly advises on acquisitions, dispositions, joint ventures, and minority investments. CK&rsquo;s background also spans multiple industries, including industrials, life sciences, cosmetics, consumer products, and financial services. Before joining Arnold &amp; Porter, CK worked at leading Korean- and U.S.-based law firms.</p> <p>In joining the firm, CK said: &ldquo;My practice has centered on complex, multi-step cross-border transactions that require close coordination across jurisdictions. Arnold &amp; Porter&rsquo;s transactional, regulatory, and sector practices align closely with my work, offering significant opportunities for cross-practice collaboration, and I look forward to building on my practice here.&rdquo;&nbsp;&nbsp; </p> <p>CK earned his J.D. from Columbia University, his LL.M. from the University of Toronto, and his LL.B. from Yonsei University.</p> <h3>About Arnold &amp; Porter</h3> <p><em>Arnold &amp; Porter combines sophisticated regulatory, litigation, and transactional capabilities to resolve clients&rsquo; most complex issues. With over 1,000 lawyers practicing in 16 offices worldwide, we offer an integrated approach that spans more than 40 practice areas. Through multidisciplinary collaboration and focused industry experience, we provide innovative and effective solutions to mitigate risks, address challenges, and achieve successful outcomes.</em></p>{CE0ABE52-F4FF-4D6C-942F-C93378794796}https://www.arnoldporter.com/en/perspectives/news/2026/08/arnold-porter-seattle-office-expands-with-life-sciences-and-technology-transactions<strong>SEATTLE, August 3, 2026</strong> &mdash; Arnold &amp; Porter announced today that Ken Miller has joined the Life Sciences and Technology Transactions teams of the firm&rsquo;s Corporate &amp; Finance practice as a partner. Ken will reside in the firm&rsquo;s Seattle office.&nbsp;Mon, 03 Aug 2026 00:00:00 -0500<p><strong>SEATTLE, August 3, 2026</strong> &mdash; Arnold &amp; Porter announced today that Ken Miller has joined the Life Sciences and Technology Transactions teams of the firm&rsquo;s Corporate &amp; Finance practice as a partner. Ken will reside in the firm&rsquo;s Seattle office. </p> <p>The firm&rsquo;s Seattle office serves as a hub for regulatory, litigation, and transactional work across key practices, including corporate and technology transactions, real estate, class actions, complex commercial litigation, employment disputes, and healthcare and hospital matters. With Ken&rsquo;s arrival, Arnold &amp; Porter&rsquo;s team in the heart of downtown Seattle has increased to 40 attorneys and staff since opening the office in July 2025. Building on this steady and purposeful growth, the firm expects to continue expanding its team in the region.</p> <p>Pallavi Mehta Wahi, chair of Western U.S. Strategic Growth and head of Arnold &amp; Porter&rsquo;s Seattle office, said: &ldquo;Ken brings a combination of deep regional roots and global experience, spending his entire career in the Pacific Northwest while working on transactions in global health, technology, and life sciences. That blend is exactly what our clients in this region need, and it reflects what Arnold &amp; Porter is building here in Seattle.&rdquo;</p> <p>Derek Stoldt, co-chair of Arnold &amp; Porter&rsquo;s Corporate &amp; Finance group, added: &ldquo;Ken has a strong track record advising clients on the full range of technology and life sciences transactions, both in private practice and in-house. He knows this market well and will be a valuable addition to our Corporate &amp; Finance team, while also expanding our highly regarded tax-exempt practice to the West Coast.&rdquo;</p> <p>Dan Kracov, chair of the firm&rsquo;s Global Life Sciences Industry group, commented: &ldquo;Ken understands global life sciences work from the inside out. That perspective, paired with his transactional skill, makes him a natural fit for our group and a real asset to clients working across borders and disciplines.&rdquo; </p> <p>Ken brings more than 25 years of experience leading complex, high-value, multiparty transactions in technology, life sciences, and global health. Ken joined Arnold &amp; Porter from the Gates Foundation, where he served for over a decade, most recently as Deputy General Counsel. In that role, Ken led legal strategy for the organization&rsquo;s $1.8 billion global health portfolio. He structured transactions that have transformed how life-saving therapies are developed, manufactured, financed, and delivered to the people who need them most. This includes a global tuberculosis vaccine program, a landmark public-private initiative spanning pharma, philanthropic capital, and global health organizations, now in Phase 3 clinical trials with 20,000 participants across five countries.</p> <p>Prior to joining the Gates Foundation, Ken spent 17 years in private practice at an Am Law 100 firm. There, he built a technology transactions practice focused on strategic licensing, IP acquisitions, investments, collaborations, and M&amp;A. Ken&rsquo;s technology transactions experience spans a wide range of industries, including life sciences, semiconductor, and software, giving him a distinctive ability to structure complex transactions where these sectors converge. He has also clerked for the Washington State Supreme Court and the Washington State Court of Appeals.</p> <p>In joining the firm, Ken said: &ldquo;We are entering a remarkable period of innovation in life sciences, technology, and global health, and clients increasingly need advisors who understand both the transactional and regulatory dimensions of that innovation. Arnold &amp; Porter has built something distinctive: deep life sciences, technology, regulatory and tax-exempt capability combined with a serious commitment to Seattle at exactly the moment this region is defining itself as a global center for AI-driven innovation. I have spent my career in the Pacific Northwest working on some of the most complex transactions in global health and technology, and I can&rsquo;t think of a better platform or a better moment to build the next chapter of that work.&rdquo;</p> <p>Ken earned his J.D. from Seattle University School of Law and his B.A. from the University of Puget Sound.</p> <h3>About Arnold &amp; Porter</h3> <p><em>Arnold &amp; Porter combines sophisticated regulatory, litigation, and transactional capabilities to resolve clients&rsquo; most complex issues. With over 1,000 lawyers practicing in 16 offices worldwide, we offer an integrated approach that spans more than 40 practice areas. Through multidisciplinary collaboration and focused industry experience, we provide innovative and effective solutions to mitigate risks, address challenges, and achieve successful outcomes.</em></p>{804ECA74-8BA2-4650-9626-E4CEC6B6B0B0}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/08/howard-sklamberg-discusses-fda-oversight-of-compounded-peptides-in-womens-healthHoward Sklamberg, Arnold &amp; Porter Life Sciences &amp; Healthcare Regulatory partner and former Deputy Commissioner for Global Regulatory Operations and Policy at the U.S. Food and Drug Administration (FDA), was quoted in the <em>Women's Health </em>article, &ldquo;You Might Be Able to Purchase Peptides Soon&mdash;but That Doesn&rsquo;t Mean They&rsquo;re FDA-Approved,&rdquo; which explores the FDA advisory committee's recommendation to allow certain peptides to be compounded under Section 503A and the regulatory and public health implications of that decision.Mon, 03 Aug 2026 00:00:00 -0500<p>Howard Sklamberg, Arnold &amp; Porter Life Sciences &amp; Healthcare Regulatory partner and former Deputy Commissioner for Global Regulatory Operations and Policy at the U.S. Food and Drug Administration (FDA), was quoted in the <em>Women's Health</em> article, &ldquo;You Might Be Able to Purchase Peptides Soon&mdash;but That Doesn&rsquo;t Mean They&rsquo;re FDA-Approved,&rdquo; which explores the FDA advisory committee's recommendation to allow certain peptides to be compounded under Section 503A and the regulatory and public health implications of that decision.</p> <p>Howard explained that the advisory committee's recommendation marked a significant departure from the FDA's traditional scientific review process, noting that "the most abnormal thing here is the advisory committee overruling FDA scientists in a wholesale fashion." He also emphasized that inclusion on the 503A bulk drug substances list should not be confused with FDA approval, highlighting that FDA-approved drugs undergo rigorous premarket review and are manufactured under current good manufacturing practices (CGMP), which provide substantially greater safeguards than those applicable to most compounded drugs. As Howard noted, "That is a much more protective set of regulations for manufacturing than applied to typical compounded drugs."</p> <p>Looking ahead, Howard cautioned that if the FDA ultimately follows the committee's recommendation, the decision could "open up a can of worms" by encouraging additional manufacturers to pursue the compounding pathway rather than the traditional FDA approval process. He further warned that if compounded peptide products proliferate faster than the agency can oversee them, "you are going to have people who get hurt."</p> <p><a href="https://www.womenshealthmag.com/health/a73320848/peptides-fda-compounding/">Read the full article</a> (subscription required).</p>{E1B39D4D-8B2F-4980-849B-BE48B53D8FEF}https://www.biosliceblog.com/2026/08/virtual-and-digital-health-digest-july-2026/Alexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comFabien Royhttps://www.arnoldporter.com/en/people/r/roy-fabienfabien.roy@arnoldporter.comSofia Holmquisthttps://www.arnoldporter.com/en/people/h/holmquist-sofiasofia.holmquist@arnoldporter.comAna González-Lamuñohttps://www.arnoldporter.com/en/people/g/gonzalez-lamuno-anaana.lamuno@arnoldporter.comHeba Jalilhttps://www.arnoldporter.com/en/people/j/jalil-hebaheba.jalil@arnoldporter.comMon, 03 Aug 2026 00:00:00 -0500{EA2EE07F-D48F-4672-B3BF-BEDE12F14F65}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/leaving-las-vegas-third-circuit-breaks-from-ninth-circuit-ruling-on-algorithmic-pricing-claimsAndre Geverolahttps://www.arnoldporter.com/en/people/g/geverola-andreandre.geverola@arnoldporter.comC. Scott Lenthttps://www.arnoldporter.com/en/people/l/lent-c-scottscott.lent@arnoldporter.comLeah J. Harrellhttps://www.arnoldporter.com/en/people/h/harrell-leah-jleah.harrell@arnoldporter.comAlejandra C. Uriahttps://www.arnoldporter.com/en/people/u/uria-alejandra-calejandra.uria@arnoldporter.comOn July 29, 2026, in <em>Cornish-Adebiyi v. Caesars Entertainment, Inc.</em>, the Third Circuit reversed the dismissal of a putative class action alleging that Atlantic City casino-hotels conspired to fix guest-room rates through a common pricing algorithm.&nbsp; It is the first federal appellate court to allow algorithmic price-fixing claims to survive a motion to dismiss.Mon, 03 Aug 2026 00:00:00 -0500<p>On July 29, 2026, in <em>Cornish-Adebiyi v. Caesars Entertainment, Inc.</em>, the Third Circuit reversed the dismissal of a putative class action alleging that Atlantic City casino-hotels conspired to fix guest-room rates through a common pricing algorithm.[[N: <em>Cornish-Adebiyi v. Caesars Entertainment, Inc.</em>, No. 24-3006 (3d Cir. July 29, 2026) (Op.).]] It is the first federal appellate court to allow algorithmic price-fixing claims to survive a motion to dismiss. The decision comes less than a year after the Ninth Circuit became the first federal appellate court to address the antitrust implications of algorithmic pricing in <em>Gibson v. Cendyn Group, LLC</em> &mdash; where it upheld the district court&rsquo;s dismissal of a complaint involving Las Vegas casino-hotels using the same algorithmic pricing software.[[N: See Andre Geverola, C. Scott Lent, Leah J. Harrell &amp; Zoe Staum, &ldquo;Ninth Circuit Clarifies Antitrust Implications of Algorithmic Pricing&rdquo; (Arnold &amp; Porter Advisory, Aug. 25, 2025); <em>Gibson v. Cendyn Grp., LLC</em>, 148 F.4th 1069 (9th Cir. 2025).]] While both cases involved the use of the same software, the differing outcomes illustrate not a conflicting approach to the applicable legal standards but to differences in the facts alleged. The Third Circuit found a viable antitrust claim because it concluded that the complaint adequately alleged a horizontal agreement among competitors and that the software used competitors&rsquo; non-public, competitively sensitive information to recommend pricing.</p> <h2>Background</h2> <p>In <em>Cornish-Adebiyi</em>, Plaintiffs allege that each casino-hotel fed its current, non-public pricing and occupancy data into the pricing software, which processed that data alongside competitors&rsquo; data to generate recommended room rates that the hotels accepted roughly 90% of the time, producing rates that rose in parallel even as occupancy fell.[[N: Op. at 9-10, 29 (citing CAC &para;&para; 6-9, 137-39, 242-50) (non-public data fed to Cendyn&rsquo;s Rainmaker suite; approximately 90% acceptance; parallel rate increases as occupancy declined).]] In September 2024, the District of New Jersey dismissed the complaint, following the district court&rsquo;s reasoning in <em>Gibson</em> and finding no adequate allegation of a &ldquo;rim&rdquo; to the alleged hub-and-spoke agreement (i.e., no horizontal agreement among the hotels).[[N: <em>Cornish-Adebiyi v. Caesars Ent., Inc.</em>, No. 1:23-CV-02536-KMW-EAP, 2024 WL 4356188 (D.N.J. Sept. 30, 2024), rev&rsquo;d and remanded, No. 24-3006, 2026 WL 2182291 (3d Cir. July 29, 2026).]] The court cited the hotels&rsquo; staggered adoption of the software over a 14-year period, the absence of allegations that data was &ldquo;pooled&rdquo; or &ldquo;commingled,&rdquo; and the hotels&rsquo; retention of final pricing authority.[[N: Id. at *4-5, *7 (staggered adoption; no allegation data was &ldquo;pooled or otherwise commingled&rdquo;; retained pricing authority; conspiracy &ldquo;lacks a rim&rdquo;).]]</p> <h2>Third Circuit Opinion</h2> <p>The Third Circuit reversed the dismissal, holding that the allegations, taken as true, plausibly support an inference that the competitor hotels agreed to fix room rates through the software.[[N: Op. at 10 (&ldquo;We hold that the well-pleaded allegations in the CAC are sufficient to support a finding that casino-hotel Defendants have conspired to fix prices through Cendyn&rsquo;s software.&rdquo;).]] The opinion reasoned that AI-enabled pricing tools could bridge the communication and monitoring gaps that historically made collusion difficult, allowing competitors to coordinate prices &ldquo;without ever communicating with each other&rdquo; and to police deviations in real time.[[N: Op. at 18 (discussing the capacity of AI-enabled algorithms to facilitate coordination and real-time monitoring).]] At the same time, the court took pains to note that there is nothing inherently unlawful about using pricing algorithms, and that its decision made no findings about how the software actually works.[[N: Op. at 13, 39 (noting there is &ldquo;nothing inherently wrong&rdquo; with using algorithms to compete more effectively, and that the court makes no assumptions about how Cendyn&rsquo;s software works).]]</p> <p>According to the court, the complaint adequately alleged that each hotel understood that its pricing recommendations were built on the non-public data all users supplied and that each &ldquo;was committed to a common plan of setting room rates based on the recommended rates received from [the] software &hellip; while also &lsquo;knowing that their competitors would not lower their room rates to take market share.&rsquo;&rdquo;[[N: Op. at 37.]] While the court acknowledged that information exchanges even among competitors are not <em>per se</em> unlawful, it held that the alleged exchanges of current pricing and occupancy data were adequately alleged to &ldquo;faciliat[e] collusive conduct.&rdquo;[[N: Op. at 36-38 (holding that requiring plaintiffs to plead how the proprietary algorithm works is inappropriate at the pleading stage; quoting <em>Todd v. Exxon Corp.</em>, 275 F.3d 191, 198 (2d Cir. 2001), on information exchange as a &ldquo;facilitating practice&rdquo;).]] The court declined to require at the pleading stage allegations explaining how the algorithm worked to facilitate the alleged collusion. Nor did the hotels&rsquo; ability to override recommendations defeat the claim because the alleged friction of &ldquo;requiring a special override to be used only in times of &lsquo;need and extreme circumstances,&rsquo; and [] scoring each casino-hotel on how often it overrides the algorithm&rsquo;s price and forecast recommendation&rdquo; combined with the alleged approximately 90% adherence rate to recommended prices supported an inference of agreement.[[N: Op. at 23, 38 (quoting <em>United States v. Masonite Corp.</em>, 316 U.S. 265, 276 (1942); the approximate 90% adherence rate and override friction support an inference of agreement).]]</p> <p>In conclusion, the Third Circuit distinguished the pricing algorithm from using &ldquo;identical spreadsheets or pricing formulas&rdquo; or even using software to set production levels because it allegedly involved &ldquo;exchange of non-public commercial information&rdquo; that was then used to provide price recommendations that were adopted most of the time.[[N: Op. at 40-41 (distinguishing amicus examples of independently used software offered by the International Center for Law &amp; Economics).]] While the court acknowledged the potential pitfalls inherent in assessing the competitive impacts of new and shifting technologies, it ultimately concluded that &ldquo;the goal of our antitrust jurisprudence remains the same: to ensure the continued existence of &lsquo;independent centers of decision-making,&rsquo;&rdquo; and held that &ldquo;[the software] is alleged to operate as a single decision-maker or hub, coordinating pricing for a majority of the market.&rdquo;[[N: Op. at 41-42.]]</p> <h2>How <em>Cornish-Adebiyi</em> Differs From <em>Gibson</em></h2> <p>Although both<em> Cornish-Adebiyi </em>and <em>Gibson</em> reached different results analyzing the same software, the two appellate decisions are largely reconcilable &mdash; and the differences are instructive.</p> <p><strong>First</strong>, the theories on appeal diverged. In <em>Gibson</em>, the plaintiffs abandoned their &ldquo;hub-and-spoke&rdquo; theory and pressed only the argument that the hotels&rsquo; separate license agreements with a common vendor, in the aggregate, violated the antitrust laws. The Ninth Circuit rejected that theory, describing the license agreements as ordinary sales contracts that did not restrain any hotel&rsquo;s ability to price independently. In <em>Cornish-Adebiyi</em>, by contrast, the plaintiffs pursued the horizontal (hub-and-spoke) agreement theory and supported it with alleged parallel conduct and plus factors.</p> <p><strong>Second</strong>, the allegations differed as to the sharing of non-public, competitively sensitive information. The <em>Gibson</em> software was not alleged to pool, share, or otherwise use one hotel&rsquo;s confidential information to inform prices for competitors, and the Ninth Circuit expressly signaled that its analysis may be different if the software allowed the sharing of confidential information among competitors.[[N: <em>Gibson v. Cendyn Group, LLC</em>, 148 F.4th 1069, 1083 (9th Cir. 2025), cert. denied, 224 L. Ed. 2d 502 (Apr. 20, 2026) (&ldquo;This analysis might change if Plaintiffs had alleged that Cendyn shared the confidential information of each competing hotel among the licensees.&rdquo;).]] In <em>Cornish-Adebiyi</em>, the Third Circuit found that the complaint alleges that the algorithm ingested each hotel&rsquo;s non-public, real-time pricing and occupancy data and used that pooled data to inform price recommendations to competitors.</p> <p><strong>Third</strong>, the <em>Cornish-Adebiyi</em> complaint alleged facts sufficient to infer agreement because the hotels accepted the algorithm&rsquo;s recommended rates roughly 90% of the time and could override them only in times of&nbsp;&ldquo;need and extreme circumstances.&rdquo;[[N: Op. at 23 (quoting CAC &para;&para; 138-39).&nbsp;]] By comparison, <em>Gibson</em> found that the complaint in that case did not allege that the hotels were required to accept the software&rsquo;s recommendations.&nbsp; &nbsp;&nbsp;</p> <p>In other words, rather than taking a conflicting approach, the Third Circuit relied on allegations that the Ninth Circuit found relevant but absent in <em>Gibson</em>. The two decisions together confirm that allegations concerning (a) a horizontal agreement among competitors (a &ldquo;rim&rdquo;), (b) an exchange of non-public, competitively sensitive information, and (c) users&rsquo; adherence to the software&rsquo;s recommendations may be the difference between dismissal and proceeding to discovery.</p> <h2>Takeaways</h2> <p><em>Cornish-Adebiyi</em> reinforces the guideposts our <a href="/en/perspectives/advisories/2025/08/antitrust-implications-of-algorithmic-pricing">August 2025 Advisory</a>&nbsp;drew from <em>Gibson</em> and shows how these key issues can be outcome determinative. Companies evaluating algorithmic pricing tools should continue to ask:</p> <ul> <li><strong>Was the decision to use the software reached independently?</strong> Communications or understandings with competitors about whether to use a tool, which tool to use, or how to use its outputs can supply the &ldquo;rim&rdquo; to an alleged antitrust conspiracy.</li> <li><strong>Does the tool incorporate non-public competitor data to make pricing recommendations?</strong> The Third Circuit relied heavily on the allegation that the software pooled each hotel&rsquo;s confidential, real-time, pricing or occupancy data, and used that data to inform pricing recommendations to competitors.&nbsp;</li> <li><strong>Does the software or the license agreement limit the user&rsquo;s ability to set pricing?</strong> The Third Circuit ruled that a high adherence rate and friction around overriding recommendations supported an inference of agreement, notwithstanding that each hotel retained nominal final pricing authority.&nbsp;</li> <li><strong>Does the software or license restrict the user&rsquo;s ability to compete in some way?</strong> Terms that limit independent pricing or the ability to use other vendors suggest potential for anticompetitive effects.</li> </ul> <p>As we cautioned after <em>Gibson</em>, enforcers have urged courts to treat the common use of pricing algorithms as potentially unlawful, and different district courts continue to reach different results.[[N: See, e.g., Statement of Interest, <em>In re MultiPlan Health Ins. Provider Litig.</em>, No. 1:24-cv-06795, ECF No. 382 (N.D. Ill. Mar. 27, 2025); Statement of Interest of the United States, <em>In re Frozen Potato Prods. Antitrust Litig.</em>, No. 1:24-cv-11801, ECF No. 266 (N.D. Ill. Feb. 27, 2026). Compare <em>In re RealPage, Inc., Rental Software Antitrust Litig.</em> (No. II), 709 F. Supp. 3d 478 (M.D. Tenn. 2023) (denying dismissal), and <em>Duffy v. Yardi Sys., Inc.</em>, 758 F. Supp. 3d 1283 (W.D. Wash. 2024) (sustaining a per se claim), with <em>Gibson v. Cendyn Grp., LLC</em>, 148 F.4th 1069 (9th Cir. 2025) (affirming dismissal), and <em>Segal v. Amadeus IT Grp.</em>, S.A., No. 24-CV-1783, 2026 WL 879583 (N.D. Ill. Mar. 31, 2026) (dismissing).&nbsp;]]&nbsp;<em>Cornish-Adebiyi</em> now provides appellate support for plaintiffs where the allegations include contemporaneous use of software among competitors, the exchange of non-public competitively sensitive information, and high adherence to the software&rsquo;s recommendations. The decision resolves the case only at the pleading stage, however, and the plaintiffs will face a higher burden to support their claims with evidence as the case proceeds. Nevertheless, companies should treat the opinion as a clear signal that third-party pricing tools can create antitrust risk and engage antitrust counsel to evaluate pricing software before adoption.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{47C1794E-7F41-4177-82A4-6BA34C27A7DC}https://www.arnoldporter.com/en/perspectives/advisories/2026/08/usda-proposes-major-overhaul-of-afida-rules-in-focus-on-the-expansion-ofMarisa N. Boccihttps://www.arnoldporter.com/en/people/b/bocci-marisa-nMarisa.Bocci@arnoldporter.comKari L. Larsonhttps://www.arnoldporter.com/en/people/l/larson-kari-lKari.Larson@arnoldporter.comJeffrey C. Thomsonhttps://www.arnoldporter.com/en/people/t/thomson-jeffrey-cjeff.thomson@arnoldporter.comThis Advisory is the third in our series on the proposed rule (Docket No. USDA-2026-0001; RIN 0560-AI70) published by the U.S. Department of Agriculture on June 25, 2026.&nbsp;Mon, 03 Aug 2026 00:00:00 -0500<p>This Advisory is the third in our series on the proposed rule (Docket No. USDA-2026-0001; RIN 0560-AI70) published by the U.S. Department of Agriculture (USDA) on June 25, 2026. Our <a href="/en/perspectives/advisories/2026/06/usda-proposes-major-overhaul-of-afida-rules">June 2026 Advisory</a>&nbsp;provided a comprehensive overview of the proposed changes to the Agricultural Foreign Investment Disclosure Act (AFIDA) framework. Our <a href="/en/perspectives/advisories/2026/07/usda-proposes-major-overhaul-of-afda-rules-in-focus-on-the-expansion-of-the">July 2026 Advisory</a>&nbsp;focused on the expanded &ldquo;beneficial owner&rdquo; definition and shift from a purely equity-based inquiry to a broader review of corporate governance and operational control as it related to foreign ownership disclosure. Here, we turn to an issue that may be of particular interest to commercial real estate practitioners: how the proposed rule&rsquo;s expanded definition of &ldquo;agricultural land&rdquo; and its narrowed exemptions for leases and easements could bring a wider range of commercial real estate assets and transactions within AFIDA&rsquo;s scope.</p> <h2>The Existing Framework: What Counts as &ldquo;Agricultural Land&rdquo; Today</h2> <p>Before examining the proposed changes, it is worth understanding the current landscape. Under 7 CFR 781.2(b), &ldquo;agricultural land&rdquo; includes all land currently used for, or if currently idle, land last used within the past five years for, farming, ranching, or timber production. The implementing regulations classify covered activities using 1987 Standard Industrial Classification (SIC) codes, primarily Division A (agriculture, forestry, and fishing).</p> <p>Three existing exemptions have historically kept many commercial real estate transactions outside AFIDA&rsquo;s practical reach: (1) tracts of land not exceeding10 acres in the aggregate where annual gross receipts from agricultural activity do not exceed $1,000; (2) leaseholds of less than 10 years (inclusive of all options to renew or extend); and (3) easements and rights-of-way used for purposes unrelated to agricultural production. 7 CFR 781.2(b), (c).</p> <p>Notably, the existing definition already sweeps more broadly than many commercial practitioners realize. The five-year look-back period for idle land means that recently farmed parcels remain &ldquo;agricultural land&rdquo; regardless of current zoning or platting or future development plans. Additionally, the inclusion of forestry and timber production means that large tracts of timberland, whether actively managed or passively held, have always been subject to AFIDA. However, the reliance on outdated SIC codes, the de minimis acreage threshold, and the lease and easement exemptions have, until now, collectively shielded a significant volume of commercial real estate activity from filing obligations.</p> <h2>The Proposed Definition: What Changes</h2> <p>Proposed Section 5100.2(b) would expand the definition of &ldquo;agricultural land,&rdquo; and proposed Section 5100.2(c) would separately revise the definition of &ldquo;any interest.&rdquo; Taken together, these terms determine which property interests are reportable under AFIDA. Under the proposed rule, both definitions would change in several significant respects:</p> <ul> <li><strong>Replacement of SIC codes with 2022 NAICS codes</strong>. The proposed rule would abandon the 1987 SIC classification system in favor of current North American Industry Classification System (NAICS) codes. This update alone broadens the scope of covered activities, because NAICS codes capture commercial categories that did not exist or were not separately classified in the 1987 SIC system.</li> <li><strong>Express inclusion of energy and infrastructure uses</strong>. Through the incorporation of the 2022 NAICS codes, the proposed definition of &ldquo;agricultural land&rdquo; includes solar electric power generation (NAICS 221114), wind electric power generation (NAICS 221115), pipeline transportation (NAICS 486), agricultural research and development (NAICS 541714 and 541715), and support activities for agriculture and forestry (NAICS 115). Agricultural supply-chain operations, including farm product warehousing and storage, livestock wholesaling, and animal slaughtering and processing, as well as research and development activities in categories such as agriculture, botany, biology, fisheries, forests, veterinary science, and agricultural biotechnology are also included within the expanded definition of &ldquo;agricultural land&rdquo;.</li> <li><strong>Conservation land expressly captured</strong>. Land that &ldquo;could be used&rdquo; for farming, ranching, forestry, or timber production &ldquo;despite its conservation designation or under the terms of its conservation designation&rdquo; would be classified as agricultural land and subject to disclosure under AFIDA. This classification captures Conservation Reserve Program (CRP) enrollments, Agricultural Conservation Easement Program (ACEP) holdings, and similar arrangements.</li> <li><strong>Elimination of the de minimis exemption</strong>. The current exemption for tracts of land that do not exceed 10 acres with less than $1,000 of annual agricultural production would be removed entirely.</li> <li><strong>Lease exemption narrowed</strong>. The exemption for leases of less than 10 years would be reduced to leases of less than one year (measuring the aggregate of multiple leases over a continuous or discontinuous period). For foreign adversaries and Foreign Adversary Controlled Entities, the exemption is entirely eliminated.</li> <li><strong>Easement and right-of-way exemption removed</strong>. The current exemption for easements &ldquo;used for purposes unrelated to agricultural production&rdquo; would be deleted in its entirety. Any easement or right-of-way across land meeting the agricultural land definition would become reportable under AFIDA. Together with the narrowed lease exemption, these changes substantially broaden the property interests subject to AFIDA reporting.</li> <li><strong>Remaining exclusions unchanged</strong>. The proposed rule leaves undisturbed the other categorical exclusions from AFIDA: security interests, contingent future interests, and interests held solely in mineral rights all continue to fall outside AFIDA&rsquo;s reporting obligations.</li> <li><strong>Zoning irrelevance</strong>. While the existing USDA guidelines note that zoning designations are not dispositive, the proposed rule clarifies that land meeting the definition of &ldquo;agricultural land&rdquo; is agricultural &ldquo;regardless of local government zoning classifications.&rdquo; Thus, rezoning alone does not remove otherwise reportable land from the bounds of AFIDA.</li> </ul> <h2>Five Scenarios: How Commercial Real Estate Is Affected</h2> <p>The following scenarios illustrate how the proposed rule changes could affect common commercial real estate transaction types.</p> <h3>Scenario 1: Developers Acquiring Agricultural Land for Commercial Purposes</h3> <p>Context: A commercial developer acquires a 500-acre parcel on the urban fringe that was used for row-crop farming until two years ago. The parcel has been rezoned for mixed-use development and no farming is occurring at closing.</p> <p>Current rule: The five-year look-back already applies, so the land is &ldquo;agricultural land&rdquo; under the existing definition. If the developer is a &ldquo;foreign person&rdquo; under the current 50%-aggregate threshold, an FSA-153 filing is required within 90 days.</p> <p>Proposed rule: The same five-year look-back applies (this is not new). However, the proposed rule has three changes that will bring more commercial projects into the AFIDA orbit: (a) the &ldquo;regardless of local zoning&rdquo; clarification removes any argument that rezoning takes land out of the definition; (b) the de minimis exemption is eliminated, so even small parcels are covered; and (c) the lowered 10%-aggregate threshold (down from 50%) means significantly more developers will be &ldquo;foreign persons.&rdquo;</p> <p>Example: A European-headquartered development fund acquires a rezoned 200-acre site outside a Sunbelt metro area. The site was in active cotton production until 18 months before closing. The fund is organized as a Delaware LLC, but a consortium of European pension funds holds 35% of the equity. Under current law, the 50%-non-concert threshold means the fund is not a &ldquo;foreign person.&rdquo; Under the proposed rule, the 10%-aggregate threshold is met, the fund is a &ldquo;foreign person,&rdquo; and the land is &ldquo;agricultural&rdquo; regardless of zoning. Filing is required within 90 days.</p> <p>Practical notes: Developers should conduct agricultural-use due diligence on rural and path-of-growth parcels, including checking USDA records, county assessor classifications, and actual use within the prior five years, even when the land is zoned for non-agricultural uses.</p> <h3>Scenario 2: Easements and Rights-of-Way Through Agricultural Land</h3> <p>Context: A utility company acquires pipeline or transmission easements across hundreds of miles of farmland, a commercial developer acquires a 30-foot-wide access easement across a neighboring farm to reach a development parcel, or a foreign person acquires an easement across a neighbor&rsquo;s timberland tract to access a personal residence.</p> <p>Current rule: Easements and rights-of-way &ldquo;used for purposes unrelated to agricultural production&rdquo; are expressly exempt from the definition of &ldquo;any interest.&rdquo; The access easement and utility easement both qualify for this exemption.</p> <p>Proposed rule: The easement exemption would be removed. Any easement or right-of-way across land meeting the &ldquo;agricultural land&rdquo; definition would be a reportable interest.</p> <p>Example: A foreign-owned pipeline company holds transmission easements across 2,000 parcels of farmland in 15 states. Under current law, none of these easements are reportable. Under the proposed rule, each easement across land meeting the agricultural-land definition would be a separately reportable interest. Because the NAICS definition now includes pipeline transportation (NAICS 486), both the land and the interest are captured.</p> <p>Practical notes: Linear infrastructure operators should inventory existing easement portfolios for AFIDA exposure. The transition window for filing on newly reportable holdings (90 days from the final rule&rsquo;s effective date) may be insufficient to inventory thousands of easements across multiple states.</p> <h3>Scenario 3: Timberland, Conservation Holdings, and Buffer Land</h3> <p>Context: A utility or infrastructure company holds timberland as a buffer around a manufacturing facility, or an investor holds land enrolled in a USDA conservation program such as CRP or ACEP.</p> <p>Current rule: Timberland already qualifies as agricultural land. Conservation land is less clear; if the land has not been used for farming or timber in the past five years, it may fall outside the existing definition. </p> <p>Proposed rule: Conservation land is now expressly included if it &ldquo;could be used for farming, ranching, forestry, or timber production despite its conservation designation or under the terms of its conservation designation.&rdquo; The de minimis exemption is eliminated.</p> <p>Example: A foreign sovereign wealth fund holds a portfolio of 50,000 acres of timberland surrounding a manufacturing complex. The timberland is already reportable. But 8,000 acres of adjacent conservation land enrolled in CRP were previously outside the definition. Under the proposed rule, the conservation acreage is now &ldquo;agricultural land,&rdquo; and the fund must file on those parcels as well.</p> <p>Practical notes: Conservation enrollment does not remove land from AFIDA. Filers must also keep the land-use breakdown current on the new geospatial map; moving acreage from cropland to conservation is a reportable use change under proposed Section 5100.3(j).</p> <h3>Scenario 4: Renewable Energy and Data Centers on Rural Land</h3> <p>Context: A solar or wind developer leases 5,000 acres of farmland under a 30-year site-control lease. A data center developer acquires a 300-acre site that was in active crop production until three years ago.</p> <p>Current rule: The lease is reportable if 10 years or longer and the lessee is a &ldquo;foreign person.&rdquo; However, solar and wind generation are not covered by the existing SIC codes so if the original solar or wind developer is mid-stream on its project and has converted the land out of agricultural land, and thereafter assigns the lease to a new foreign person, the new assignee would not have an obligation to file (note, however, that the original lessee would have triggered a filing obligation upon the disposition of its interest). For the data center, the five-year look-back applies, but data center development is not itself a covered activity.</p> <p>Proposed rule: Solar electric power generation (NAICS 221114) and wind electric power generation (NAICS 221115) are now expressly included as part of the definition of &ldquo;agricultural land,&rdquo; so the subsequent acquisition of operating projects that were not previously reportable by the assignee would not become reportable. The lease exemption narrows from under 10 years to under one year; the vast majority of renewable leases will be reportable under this revised framework. The USDA preamble notes that it is &ldquo;aware that agricultural land is often leased to develop or explore the potential development of land for particular purposes, including energy projects&rdquo; and specifically requests comment on how to calculate fair market value for such leases. (91 Fed. Reg. at 38319.)</p> <p>Example: A Danish renewable energy company holds renewable leases on 20,000 acres of cropland across the Midwest for a portfolio of wind projects. The leases are structured such that the lease commences as of the execution date (and not a later exercise of an option thereunder) and continue through the decommissioning period a total of 45 years. Under current law, the company files on the leases (10-plus years). Under the proposed rule, wind electric power generation is itself a covered NAICS code. Accordingly, any subsequent transfers of the leasehold interest would also be subject to filing obligations for not just the original lessee, but also any subsequent foreign persons, regardless of what stage the wind project is in for its development, so long as one year or more remains on the lease. The company should inventory all lease interests, including short-term options and extensions, for new filing exposure.</p> <p>Practical notes: Renewable energy developers that are already AFIDA filers should review whether the expanded definition captures additional interests or parcels. Developers structuring new leases or other site control arrangements should consider how the one-year lease threshold and the inclusion of solar and wind NAICS codes affect phased development timelines.</p> <h3>Scenario 5: Path-of-Growth Portfolios and Pre-Development Holdings</h3> <p>Context: A developer or institutional investor acquires and holds parcels of farmland in anticipation of future rezoning and development, leasing the land to local farmers in the interim.</p> <p>Current rule: The land is &ldquo;agricultural land&rdquo; while being farmed (and for five years after farming ceases). The lease exemption (under 10 years) shields farm leases from creating independent filing obligations for foreign tenants.</p> <p>Proposed rule: (a) The zoning-irrelevance rule means that rezoning the parcel during the hold period does not remove it from the definition; (b) the lease exemption narrows to under one year, so a three-year farm lease to a foreign tenant now triggers the tenant&rsquo;s independent filing obligation; (c) the lowered 10%-aggregate threshold means the developer is more likely to be a &ldquo;foreign person&rdquo;; and (d) the ongoing obligation to update the geospatial map and land-use breakdown means that changes in how the land is farmed (rotating crops, enrolling acreage in conservation) must be reported.</p> <p>Example: A U.S. real estate fund with 12%-aggregate foreign LP ownership holds 15,000 acres of Midwestern cropland as a path-of-growth portfolio, leasing the land to local farmers under rolling three-year leases. Under current law, the fund is not a &ldquo;foreign person&rdquo; (50%-non-concert threshold not met; three-year leases are exempt). Under the proposed rule, the fund is a &ldquo;foreign person&rdquo; (10%-aggregate threshold met), the three-year farm leases are reportable (over one year), and any foreign tenant-farmers also have independent filing obligations.</p> <p>Practical notes: Developers holding path-of-growth portfolios should: (1) map upstream foreign ownership to assess whether the 10%-aggregate threshold is met; (2) review lease arrangements with tenant-farmers for potential tenant filing obligations; and (3) establish a monitoring process for land-use changes that trigger update filings. Consider adding AFIDA representation and notice covenants to farm leases.</p> <h2>Key Takeaways for Commercial Real Estate Practitioners</h2> <ul> <li><strong>Developers</strong>: Conduct agricultural-use due diligence on all rural and transitional land acquisitions, even when the land is rezoned. The five-year look-back and zoning-irrelevance rule can surprise.</li> <li><strong>Infrastructure and pipeline companies</strong>: Inventory existing easement and right-of-way portfolios for newly reportable interests. Consider the 90-day transition window.</li> <li><strong>Renewable energy developers</strong>: Solar, wind, and pipeline NAICS codes are now expressly covered. Review all site-control leases, including short-term options, for filing exposure under the narrowed lease exemption.</li> <li><strong>Asset managers and fund sponsors</strong>: Map upstream foreign ownership. The 10%-aggregate threshold (down from 50%) and the beneficial-owner trigger (control-based, no equity floor) mean more vehicles will be &ldquo;foreign persons.&rdquo;</li> <li><strong>Landlords with foreign tenants</strong>: A foreign tenant&rsquo;s lease of one year or more now triggers the tenant&rsquo;s independent filing obligation. Consider AFIDA representations and notice covenants in leases.</li> </ul> <h2>Final Points</h2> <p>In addition to the expanded AFIDA disclosure requirements, it is worth noting two important points. First, AFIDA filing obligations are often used as a trigger for separate filing obligations under state analogous statutes. Accordingly, a broader filing pool under AFIDA will result in a broader filing pool under many state reporting regimes. Furthermore, many of these state regimes also include their own prohibitions, acreage limitations, or other use restrictions. And, second, while not currently in effect, there are federal legislative proposals to align the administration of AFIDA with the Committee on Foreign Investment in the United States&rsquo; national security mission.[[N:&nbsp;This Advisory draws on the proposed rule and the following primary sources: 91 Fed. Reg. 38315 (June 25, 2026); proposed Sections 5100.2(b), (c), (p); 5100.3(b), (e), (j); 5100.4(b)(3); 7 CFR 781.2(b), (c), (k); USDA National Farm Security Action Plan (July 2025); GAO-24-106337 (Jan. 2024).]]</p> <p>The comment period on the proposed rule closes on August 10, 2026. We are continuing to monitor developments and can assist with assessing exposure, structuring analysis, and preparing public comments.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{B15F28B0-D158-4772-B373-59EBE6E4373A}https://www.arnoldporter.com/en/perspectives/news/2026/07/managing-ip-recognizes-arnold-porter-in-2026-ip-stars-americas-rankings<em>Managing IP</em> recognized 18 Arnold &amp; Porter lawyers as IP Stars and Rising Stars in its 2026 IP Stars Americas rankings. The guide also recognized 17 Arnold &amp; Porter practice areas across multiple U.S. regions for their intellectual property capabilities. IP STARS is an annual guide that identifies leading intellectual property practitioners and firms based on peer and client feedback, evaluating factors such as expertise, workload, and outcomes achieved for clients.Fri, 31 Jul 2026 00:00:00 -0500<p><em>Managing IP</em> recognized 18 Arnold &amp; Porter lawyers as IP Stars and Rising Stars in its 2026 IP Stars Americas rankings. The guide also recognized 17 Arnold &amp; Porter practice areas across multiple U.S. regions for their intellectual property capabilities. IP Stars is an annual guide that identifies leading intellectual property practitioners and firms based on peer and client feedback, evaluating factors such as expertise, workload, and outcomes achieved for clients.</p> <p>The following Arnold &amp; Porter lawyers were recognized by <em>Managing IP</em>:</p> <ul> <li>David Benyacar&mdash;Patent Star (United States National; New York)</li> <li>Daniel DiNapoli&mdash;Patent Star (United States National; New York)</li> <li>Deborah Fishman&mdash;Patent Star (United States National; California)</li> <li>Patrick Hall&mdash;Rising Star (United States National; Colorado)</li> <li>Dori Hanswirth&mdash;Copyright Star (United States National; New York)</li> <li>Michael Harris&mdash;Patent Star (United States National; Illinois)</li> <li>Ronald Johnston&mdash;Trademark Star; Copyright Star (United States National; California)</li> <li>Paul Llewellyn&mdash;Trademark Star (United States National; New York)</li> <li>Thomas Magnani&mdash;Transactions Star (United States National; California)</li> <li>David Marsh&mdash;Patent Star (United States National; District of Columbia)</li> <li>Oscar Ramallo&mdash;Rising Star (United States National; California)</li> <li>Daniel Reisner&mdash;Patent Star (United States National; New York)</li> <li>Christopher Renk&mdash;Patent Star; Trademark Star (United States National; Illinois)</li> <li>Evan Rothstein&mdash;Patent Star (United States National; Colorado)</li> <li>Matthew Salzmann&mdash;Trademark Star (United States National; New York)</li> <li>Rhonda Trotter&mdash;Trademark Star; Copyright Star (United States National; California)</li> <li>Pallavi Mehta Wahi&mdash;Trademark Star (United States National; Washington)</li> <li>Matthew Wolf&mdash;Patent Star (United States National; District of Columbia)</li> </ul> <p>The annual guide also recognized Arnold &amp; Porter in the following practice areas:</p> <ul> <li>Copyright &amp; Related Rights (United States National)</li> <li>Federal Circuit (United States National)</li> <li>IP Transactions (United States National)</li> <li>Life Sciences &ndash; IP (United States National)</li> <li>Patent Disputes (United States National)</li> <li>Trademark Disputes (United States National)</li> <li>Trademark Prosecution (United States National)</li> <li>Copyright &amp; Related Rights (California)</li> <li>Patent Disputes (California)</li> <li>Trademark Disputes (California)</li> <li>Copyright &amp; Related Rights (District of Columbia)</li> <li>Patent Disputes (District of Columbia)</li> <li>Patent Prosecution (District of Columbia)</li> <li>Trademark Disputes (District of Columbia)</li> <li>Copyright &amp; Related Rights (New York)</li> <li>Patent Disputes (New York)</li> <li>Trademark Disputes (New York)</li> </ul> <p>Earlier this year, <em>Managing IP</em> recognized Arnold &amp; Porter in its <a href="https://www.arnoldporter.com/en/perspectives/news/2026/06/managing-ip-names-four-arnold-porter-lawyers-as-western-europe-ip-stars">2026 IP Stars Western Europe rankings</a>, recognizing the firm&rsquo;s IP Transactions practice and four lawyers for their individual achievements.</p>{8CE0E331-9E41-4B8A-AD03-EB060D3E7F12}https://www.arnoldporter.com/en/perspectives/news/2026/07/latin-lawyer-recognizes-arnold-porter-finance-lawyers-in-2025-deal-trackerArnold &amp; Porter partner Gregory Harrington, counsel Arturo Caraballo, and senior associates Valentina Garzon and Mateo Morris Lievano have been recognized in <em>Latin Lawyer's </em>2025 Deal Tracker, which provides an annual ranking of the most active international lawyers advising on financing transactions across Latin America. The lawyers were named in the Debt Capital Markets and Banking &amp; Finance categories. Greg Harrington was one of only six international lawyers recognized across both the Debt Capital Markets and Banking &amp; Finance categories.Fri, 31 Jul 2026 00:00:00 -0500<p>Arnold &amp; Porter partner Gregory Harrington, counsel Arturo Caraballo, and senior associates Valentina Garzon and Mateo Morris Lievano have been recognized in <em>Latin Lawyer&rsquo;s</em> 2025 Deal Tracker, which provides an annual ranking of the most active international lawyers advising on financing transactions across Latin America. The lawyers were named in the Debt Capital Markets and Banking &amp; Finance categories. Greg Harrington was one of only six international lawyers recognized across both the Debt Capital Markets and Banking &amp; Finance categories.</p> <p>The following Arnold &amp; Porter lawyers were recognized among the most active international lawyers:</p> <ul> <li>Gregory Harrington&mdash;Debt Capital Markets and Banking &amp; Finance</li> <li>Arturo Caraballo&mdash;Banking &amp; Finance</li> <li>Valentina Garzon&mdash;Debt Capital Markets</li> <li>Mateo Morris Lievano&mdash;Banking &amp; Finance</li> </ul> <p>Together, these recognitions reflect Arnold &amp; Porter&rsquo;s strength advising sovereign, state-owned, and corporate clients on sophisticated financing transactions throughout Latin America. Based on transactions reported to <em>Latin Lawyer</em>, the Deal Tracker rankings recognize the firm&rsquo;s work across the principal forms of international financing, including bond offerings, syndicated loans, liability management transactions, and other capital markets and banking and finance matters.</p>{98CFAD99-CF1E-43C7-91C9-62FDF7D1E0A3}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/debbie-feinstein-discusses-state-ag-enforcement-and-antitrust-trends-in-legal-businessDebbie Feinstein, Arnold &amp; Porter Antitrust/Competition partner and former Bureau of Competition Director at the U.S. Federal Trade Commission (FTC), was quoted in the <em>Legal Business</em> article, &ldquo;Open for Business: Top Antitrust Lawyers on Getting Deals Done in Trump's Second Term,&rdquo; which examines how merger enforcement is evolving under the current administration.Fri, 31 Jul 2026 00:00:00 -0500<p>Debbie Feinstein, Arnold &amp; Porter Antitrust/Competition partner and former Bureau of Competition Director at the U.S. Federal Trade Commission (FTC), was quoted in the <em>Legal Business</em> article, &ldquo;Open for Business: Top Antitrust Lawyers on Getting Deals Done in Trump's Second Term,&rdquo; which examines how merger enforcement is evolving under the current administration.</p> <p>Discussing the growing role of state attorneys general in merger review, Debbie noted that states are increasingly willing to investigate transactions that federal enforcers decline to challenge. "We are beginning to see the states jump into things. I'm hearing that they are investigating deals where the DOJ took a pass," she observed. She further explained that, while political considerations are playing a greater role in merger enforcement, companies should maintain perspective. "That doesn't mean that on every deal you need to hire a lobbyist and they'll magically make it go away, but I can't say that lobbyists are totally irrelevant either." </p> <p>Debbie also discusses the ongoing antitrust scrutiny of pharmaceutical transactions, explaining that the sector receives heightened attention largely due to the volume of deals and its innovation-driven business model. She noted that acquisitions of emerging biotechnology companies are "a very normal part of the ecosystem," reflecting the central role mergers play in advancing drug development.</p> <p><a href="https://www.legalbusiness.co.uk/law-firms/open-for-business-top-antitrust-lawyers-on-getting-deals-done-in-trumps-second-term/">Read the full article</a> (subscription required).</p>{5D9A9985-AEEA-441E-B2D6-8484FC3D9933}https://www.arnoldporter.com/en/perspectives/publications/2026/07/virtual-digital-health-digestAllison W. Shurenhttps://www.arnoldporter.com/en/people/s/shuren-allison-wallison.shuren@arnoldporter.comFabien Royhttps://www.arnoldporter.com/en/people/r/roy-fabienfabien.roy@arnoldporter.comAbeba Habtemariamhttps://www.arnoldporter.com/en/people/h/habtemariam-abebaAbeba.Habtemariam@arnoldporter.comAlexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comNancy L. Perkinshttps://www.arnoldporter.com/en/people/p/perkins-nancy-lnancy.perkins@arnoldporter.comMonique Nolan, M.D., J.D.https://www.arnoldporter.com/en/people/n/nolan-moniquemonique.nolan@arnoldporter.comCasey Brouhardhttps://www.arnoldporter.com/en/people/b/brouhard-caseycasey.brouhard@arnoldporter.comAna González-Lamuñohttps://www.arnoldporter.com/en/people/g/gonzalez-lamuno-anaana.lamuno@arnoldporter.comSofia Holmquisthttps://www.arnoldporter.com/en/people/h/holmquist-sofiasofia.holmquist@arnoldporter.comHeba Jalilhttps://www.arnoldporter.com/en/people/j/jalil-hebaheba.jalil@arnoldporter.comJacqueline L. Degannhttps://www.arnoldporter.com/en/people/d/degann-jacquelinejackie.degann@arnoldporter.comKatherine Rohdehttps://www.arnoldporter.com/en/people/r/rohde-katherinekate.rohde@arnoldporter.comBrianna Morigneyhttps://www.arnoldporter.com/en/people/m/morigney-briannabrianna.morigney@arnoldporter.comLily Caohttps://www.arnoldporter.com/en/people/c/cao-lilylily.cao@arnoldporter.comMickayla A. Stogsdillhttps://www.arnoldporter.com/en/people/s/stogsdill-mickaylamickayla.stogsdill@arnoldporter.comCaroline Oliverhttps://www.arnoldporter.com/en/people/o/oliver-carolinecaroline.oliver@arnoldporter.comThis digest covers key virtual and digital health regulatory and public policy developments during June and early July 2026 from the United States, United Kingdom, and European Union.Fri, 31 Jul 2026 00:00:00 -0500<p>This digest covers key virtual and digital health regulatory and public policy developments during June and early July 2026 from the United States, United Kingdom, and European Union.</p> <h2>In this issue, you will find the following:</h2> <h3>U.S. News</h3> <ul> <li><a href="#Health Care Fraud And Abuse Updates">Health Care Fraud and Abuse Updates</a></li> <li><a href="#Privacy and AI Updates">Privacy and Artificial Intelligence (AI) Updates</a></li> <li><a href="#Policy Updates">Policy Updates</a></li> <li><a href="#FDA Updates">FDA Updates</a></li> <li><a href="#Provider Reimbursement">Provider Reimbursement</a></li> </ul> <h3>U.S. Featured Content </h3> <p>This month&rsquo;s edition highlights a sweeping range of developments across health care fraud enforcement, artificial intelligence (AI) regulation, and federal health policy. On the enforcement front, the U.S. Department of Justice&rsquo;s (DOJ) 2026 National Health Care Fraud Takedown charged 455 defendants in connection with over $6.5 billion in alleged fraud, with several cases spotlighting the growing role of telemedicine and digitally enabled schemes in Medicare abuse. A licensed nurse practitioner and telemedicine company owner was also sentenced to 10 years in prison for her role in a $136 million Medicare fraud scheme. In the regulatory space, the Federal Trade Commission (FTC) released a proposed policy statement expressing concern that AI developers may be training models to suppress accuracy, with a public comment period open through July 31, 2026. On Capitol Hill, bipartisan legislation was introduced to accelerate AI-driven solutions for pediatric cancer, while the House Appropriations Committee advanced its Fiscal Year (FY) 2027 spending bill, which notably includes a prohibition on Centers for Medicare &amp; Medicaid Services (CMS) funding for the AI-powered WISeR prior authorization model. Meanwhile, CMS established a new Office of Health Technology and Products to lead AI strategy across its programs, and the FDA issued a warning letter over unauthorized software changes to a patient monitoring device, sought public input on non-device software functions, and announced a public meeting on medical device user fee reauthorization with a focus on strengthening digital health oversight. CMS also released two Medicare payment proposed rules that would set 2027 rates for physicians and hospital outpatient departments and address several virtual and digital health policies.&nbsp;</p> <h3>EU and UK News</h3> <ul> <li><a href="#Regulatory Updates">Regulatory Updates</a></li> <li><a href="#Pricing and Reimbursement Updates">Pricing and Reimbursement Updates</a></li> <li><a href="#Privacy Updates">Privacy Updates</a></li> </ul> <h3>EU/UK Featured Content </h3> <p>AI continues to be at the top of the agenda for regulators in Europe. The European Commission (EC) has been focused on preparing for the majority of the provisions in the AI Act to come into force this August. Among those provisions are the transparency requirements, and to assist organizations with compliance, the EC has published a voluntary Code of Practice on the marking and labeling of AI-generated content. Further, a Scientific Panel and an Advisory Forum have been appointed to advise the EC&rsquo;s AI Office and national competent authorities on implementation and enforcement of the AI Act.</p> <p>In the UK, we are seeing a continued commitment to regulating AI through guidance and codes of practice, as well as the provision of regulatory support through sandbox programs. The Information Commissioner&rsquo;s Office (ICO), the data protection regulator, has published its plan for upcoming work in relation to AI, which sets out various plans for guidance and codes of practice. The Medicines and Healthcare products Regulatory Agency (MHRA) continues its focus on regulatory sandboxes and recently reported the outcome of the second phase of the AI Airlock. It has also announced further AI sandboxes in order to accelerate the development of medicines and to allow innovators to test AI tools that have the potential to predict how medicines behave in the body, and another, which will be London-focused.</p> <p>The key legislative development this month is that the EU Council has adopted its position on the first part of the Biotech Act, which, together with the European Commission&rsquo;s draft, will form the basis of the trilogue discussions between the European Union (EU) institutions, hopefully leading to agreement on a finalized text.&nbsp; </p> <h2>U.S. News</h2> <h3><a name="Health Care Fraud And Abuse Updates">Health Care Fraud And Abuse Updates</a></h3> <p><strong><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/national-health-care-fraud-takedown-results-455-defendants-charged-connection-over-65" target="_blank">National Health Care Fraud Takedown Results in 455 Defendants Charged in Connection With Over $6.5 Billion in Alleged Fraud</a></strong>.<strong><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/national-health-care-fraud-takedown-results-455-defendants-charged-connection-over-65" target="_blank"></a></strong>On June 23, 2026, the DOJ announced its 2026 National Health Care Fraud Takedown, charging 455 defendants, including 90 physicians and other licensed medical professionals, in connection with more than $6.5 billion in alleged false claims across 56 federal districts and 45 states and territories. Several of the matters involved telemedicine and digitally enabled schemes.</p> <p>The DOJ highlighted the arrest of Herb Kimble in connection with a previously charged $1.2 billion telemedicine and durable medical equipment (DME) scheme.&nbsp;</p> <p>Additionally, the takedown included charges against Anthony Tursi for conspiracy to commit health care fraud and conspiracy to pay and receive health care kickbacks in connection with a $62 million scheme to bill Medicare for medically unnecessary genetic testing. Tursi allegedly owned a call center that ran deceptive telemarketing campaigns to persuade Medicare beneficiaries to agree to genetic tests and then sent faxes containing false and misleading representations to the beneficiaries&rsquo; physicians to induce them into signing orders for the tests.</p> <p>On June 23, 2026, as part of the takedown, Bhamin Chhatrapati of Massachusetts was charged with conspiracy to commit health care fraud in connection with more than $5.1 million fraudulently billed to Medicare for DME. From approximately February 2023 through September 2024, Chhatrapati and his co-conspirators allegedly worked with telemarketers and call centers to obtain Medicare beneficiaries&rsquo; information and used it to generate documentation making it appear that practitioners had legitimately prescribed medically necessary DME. The defendants allegedly paid the telemarketers per-brace order approved by Medicare, which paid over $2.6 million on the fraudulent claims.</p> <p>Also on June 23, 2026, as part of the takedown, the U.S. Attorney&rsquo;s Office for the Northern District of New York announced that Aptihealth Inc. and Aptihealth Medical, PLLC, a telehealth behavioral health provider, agreed to pay $300,000 to resolve civil allegations under the False Claims Act. The government alleged that Aptihealth billed Medicare and Medicaid for services that were not rendered or not supported by adequate documentation, improperly billed administrative tasks as reimbursable medical services, offered gift cards to induce recipients to receive services, and failed to maintain an effective compliance program as required by New York law.&nbsp;</p> <p>The takedown resulted in the CMS suspending 1,079 providers and revoking billing privileges for 1,403 providers.&nbsp;</p> <p><strong><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/telemedicine-company-owner-and-author-health-care-compliance-books-sentenced-136m-medicare" target="_blank">Telemedicine Company Owner and Author of Health Care Compliance Books Sentenced for $136 Million Medicare Fraud Scheme</a></strong>. On June 30, 2026, Jean Wilson, a licensed nurse practitioner who owned and operated two telemedicine companies, was sentenced to 120 months in prison and ordered to pay $66 million in restitution for her role in a scheme to bill Medicare for medically unnecessary DME and prescription drugs.</p> <p>According to court documents, between 2017 and 2019, Wilson and others allegedly paid illegal kickbacks to providers to sign orders for orthotic braces and drug prescriptions for Medicare beneficiaries who did not need them and then sold the signed orders and prescriptions to purported marketing companies. Those marketers allegedly resold the orders to brace suppliers and pharmacies that billed the program. Wilson allegedly used shell accounts and nominee owners to conceal the conduct. In total, the scheme submitted over $136 million in false claims, of which Medicare paid more than $66 million.&nbsp;</p> <h3><a name="Privacy and AI Updates">Privacy and AI Updates</a></h3> <p><strong>Federal Trade Commission Solicits Comments on Proposed Policy Statement on AI Accuracy</strong>. On July 1, 2026, the FTC released a proposed Policy Statement regarding its concerns that AI developers may be training their products to &ldquo;suppress accuracy&rdquo; such as &ldquo;by training a model surreptitiously to produce ideologically motivated distortions in a response to a factual question.&rdquo; The proposed statement emphasizes that consumers have come to rely on AI to assist them in making important decisions, including health-related choices, and notes that the FTC recently invoked its authority to address an AI company&rsquo;s allegedly misleading claims that its AI tool could effectively replace human customer service representatives. The proposed policy statement will be published in the Federal Register. The public will have until July 31, 2026 to <a rel="noopener noreferrer" href="https://www.regulations.gov/docket/FTC-2026-0859" target="_blank">submit comments</a> on the policy statement.</p> <p><strong>New Federal Bill Would Support AI Use in Pediatric Health Care</strong>. On July 9, 2026, House members Michael McCaul (R-TX), together with Ami Bera (D-CA) and Mike Kelly (R-PA), all of whom are Co-Chairs of the Congressional Childhood Cancer Caucus, introduced the <a rel="noopener noreferrer" href="https://www.congress.gov/bill/119th-congress/house-bill/9632/text?s=1&amp;r=1" target="_blank">Accelerating Innovation for Kids with Cancer Act</a> (HR 9632) as a means to encourage the use of AI for the development of cures for pediatric cancer. If enacted, the bill would require the president to appoint an individual or organization as a federal Coordinator of AI innovation, with the charge of identifying opportunities to accelerate the advancement of AI-driven solutions at the National Institutes of Health&rsquo;s Cancer Institute&rsquo;s Childhood Cancer Data Initiative (CCDI). The bill refers to several specific potential AI-driven measures for this purpose, including improving clinical trial design and access; making data platforms and AI tools available as part of the CCDI data ecosystem; and improving data infrastructure by consolidating data from multiple sources for AI-ready analysis and using AI to help select clinical trial subjects. The bill would require the U.S. Department of Health and Human Services (HHS) to establish interoperability standards for processing patient data with AI that provide for &ldquo;safe and privacy-compliant&rdquo; exchanges of data. The bill has been referred to the House Energy and Commerce Committee for further action.&nbsp;</p> <h3><a name="Policy Updates">Policy Updates</a></h3> <p><strong>House Appropriations Committee Approves FY27 Labor, Health and Human Services, Education, and Related Agencies Appropriations Bill</strong>. On June 9, 2026, the House Appropriations Committee <a rel="noopener noreferrer" href="https://appropriations.house.gov/schedule/markups/full-committee-markup-fiscal-year-2027-labor-health-and-human-services-education-0" target="_blank">held</a> a Full Committee Markup of the FY27 <a rel="noopener noreferrer" href="https://www.congress.gov/119/bills/hr9260/BILLS-119hr9260rh.pdf" target="_blank">Labor, Health and Human Services, Education, and Related Agencies (L-HHS) bill</a>. The committee favorably reported the FY27 L-HHS appropriations bill to the House by a party-line vote of 34-28. The committee recommends $110.8 billion in discretionary budget authority for HHS, which would be a reduction of $4 billion from the FY26-enacted level.</p> <p>Notably, the committee adopted a <a rel="noopener noreferrer" href="https://appropriations.house.gov/sites/evo-subsites/republicans-appropriations.house.gov/files/evo-media-document/aderholt-1-manager-s-amendment.pdf" target="_blank">Manager&rsquo;s Amendment</a>, which includes language that would prohibit CMS from using funds to implement the Wasteful and Inappropriate Service Reduction (<a rel="noopener noreferrer" href="https://www.cms.gov/priorities/innovation/innovation-models/wiser" target="_blank">WISeR</a>) Model, which applies AI to Medicare prior authorization for certain services, and would require oversight of the WISeR model&rsquo;s impact on patients and providers. The Manager&rsquo;s Amendment was adopted by a voice vote.</p> <p><strong>House Appropriations Committee Releases Its FY27 Labor, Health and Human Services Appropriations Report</strong>. On June 8, 2026, the House Appropriations Committee released its accompanying FY27 L-HHS <a rel="noopener noreferrer" href="https://docs.house.gov/meetings/AP/AP00/20260609/119380/HMKP-119-AP00-20260609-SD003.pdf" target="_blank">report</a>. Appropriations bill reports clarify funding levels, signal congressional intent and policy priorities to HHS agencies, provide oversight and accountability, and provide instructions on various reporting requirements.</p> <p>The report includes $45.5 million for the Office for the Advancement of Telehealth (OAT) to promote the effective use of technologies to improve access to health services for people who are isolated from health care services and to provide distance education for health professionals.</p> <p>The report also encourages CMS to leverage relevant feedback and consider policies in the upcoming proposed Medicare payment rules to provide targeted criteria to Medicare providers and medical technology innovators regarding the reimbursement pathway for FDA-authorized AI/machine learning (ML)-enabled medical devices, including algorithm-based health care services (ABHS) technologies.</p> <p>Additionally, in the report, the committee urges the withdrawal and rescinding of the <a rel="noopener noreferrer" href="https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202504&amp;RIN=0945-AA00" target="_blank">Notice of Proposed Rulemaking</a> at the Office of Management and Budget (OMB) titled, &ldquo;[Health Insurance Portability and Accountability Act] HIPAA Privacy Rule: Changes to Support the Use of Telecommunications Relay Services and Improve Information Sharing for Uniformed Services Personnel.&rdquo; The committee expresses concern that the proposal may unintentionally impact patient privacy protections in relation to entities that operate outside the scope of HIPAA.&nbsp;</p> <p><strong>FDA Announces Public Meeting to Discuss Proposed Recommendations for Reauthorizing the MDUFA for Fiscal Years 2028 Through 2032</strong>. The Food and Drug Administration (FDA) has <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/07/08/2026-13778/medical-device-user-fee-amendments-public-meeting-request-for-comments" target="_blank">announced </a>a public meeting, &ldquo;Medical Device User Fee Amendments,&rdquo; scheduled for August 5, 2026. The meeting will focus on proposed recommendations for the reauthorization of the Medical Device User Fee Amendments (MDUFA) for fiscal years 2028-2032. Current statutory authority for MDUFA is set to expire on September 30, 2027.</p> <p>Of note, one of FDA&rsquo;s recommendations for MDUFA VI includes strengthening digital health expertise and aligning review processes with software lifecycles through expanded technical capacity, enhanced reviewer training, and stakeholder engagement on emerging technologies.</p> <p><strong>CMS Establishes the Office of Health Technology and Products</strong>. On June 10, 2026, CMS <a rel="noopener noreferrer" href="https://public-inspection.federalregister.gov/2026-11743.pdf" target="_blank">established</a> the Office of Health Technology and Products (OHTP). The new office will focus on &ldquo;technology modernization, digital products, and transforming of platforms and services supporting Medicare, Medicaid, the Children&rsquo;s Health Insurance Program (CHIP), and other CMS-administered programs.&rdquo; OHTP will lead strategy and implementation of AI across CMS&rsquo; digital products and platforms, as well as advise CMS leadership on AI opportunities, risk, and governance.</p> <p><strong>UpDoc Announces That the FDA Has Cleared the First Large Language Model-Based Software as a Medical Device</strong>. On June 25, 2026, UpDoc, a clinical AI company that offers a provider-integrated agentic AI platform, <a rel="noopener noreferrer" href="https://updoc.com/press" target="_blank">announced</a> that it received FDA clearance for the first Software as a Medical Device (SaMD) that uses large language models. The AI agent can be integrated into a provider&rsquo;s electronic health records for support across clinical workflows. UpDoc states that the agent is &ldquo;designed to support doctors, not replace them.&rdquo; The platform was originally tested in a <a rel="noopener noreferrer" href="https://jamanetwork.com/journals/jamanetworkopen/fullarticle/2812420" target="_blank">clinical trial</a> at Stanford Medicine and will undergo initial deployment at Cleveland Clinic, Allegheny Health Network, and UCSF Health.</p> <h3><a name="FDA Updates">FDA Updates</a></h3> <p><strong>FDA Warning Letter Regarding Modified Patient-Monitoring Software</strong>. On June 12, 2026, FDA <a rel="noopener noreferrer" href="https://www.fda.gov/inspections-compliance-enforcement-and-criminal-investigations/warning-letters/nihon-kohden-digital-health-solutions-llc-727803-06122026" target="_blank">issued</a> a warning letter to Nihon Kohden Digital Health Solutions, LLC concerning the company&rsquo;s Next Generation NetKonnect (NGNK) software, a 510(k)-cleared patient-monitoring device. FDA concluded that the device was adulterated and misbranded because the company made significant software and intended-use changes without submitting a new 510(k).</p> <p>FDA disagreed with the company&rsquo;s determination that the addition of a &ldquo;Silence Alarms&rdquo; function would not significantly affect the device&rsquo;s safety or effectiveness. The agency characterized the feature as a change to the device&rsquo;s control mechanism because it alters how users control alarms and could cause alarms for life-threatening conditions to be missed, potentially resulting in serious injury or death. FDA therefore determined that the change required a new 510(k).</p> <p>FDA also found that the company was marketing the NGNK software as having &ldquo;device-agnostic compatibility,&rdquo; including the ability to receive data from devices manufactured by third parties. The cleared device, however, was limited to inputs from other Nihon Kohden devices. FDA concluded that expanding compatibility to unvalidated third-party devices constituted a major change in intended use and could create interoperability risks, including incorrect vital-sign measurements, loss of monitoring, delayed diagnosis, or misdiagnosis.&nbsp;</p> <p><strong>FDA Requests Input on Certain Non-Device Software Functions and Impacts to Patient Safety</strong>. On July 14, 2026, FDA <a rel="noopener noreferrer" href="https://www.fda.gov/about-fda/cdrh-reports/reports-non-device-software-functions" target="_blank">announced</a> that it is seeking public input to inform its forthcoming 2026 report on the risks and benefits of certain software functions that are excluded from the statutory definition of a medical device under the 21st Century Cures Act. FDA is specifically requesting information regarding patient-safety impacts and best practices for promoting safety, education, and user competency. Comments are due August 13, 2026. The request covers five categories of non-device software functions: software intended to support health care facility administration; encourage a healthy lifestyle; serve as an electronic patient record; transfer, store, convert, or display medical data; and provide certain limited clinical decision support. Although these functions generally fall outside FDA&rsquo;s device regulatory authority, the agency is required to report every two years on their health-related risks and benefits and their effects on patient safety.</p> <p> </p> <h3><a name="Provider Reimbursement">Provider Reimbursement</a></h3> <p><strong>Calendar Year Physician Fee Schedule Proposed Rule.</strong> On July 16, 2026, CMS <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/07/16/2026-14327/medicare-and-medicaid-programs-cy-2027-payment-policies-under-the-physician-fee-schedule-and-other" target="_blank">published</a> the calendar year (CY) 2027 Medicare Physician Fee Schedule proposed rule. The proposed rule includes several notable policies concerning remote physiologic monitoring (RPM), remote therapeutic monitoring (RTM), telehealth services, and technology-enabled primary care.</p> <p><strong>Remote Monitoring</strong>. In response to growing program-integrity concerns &mdash; including an <a rel="noopener noreferrer" href="https://oig.hhs.gov/documents/evaluation/10001/OEI-02-23-00260.pdf" target="_blank">HHS Office of Inspector General report</a> identifying the need for additional oversight of RPM services &mdash; CMS proposes several changes intended to strengthen billing requirements and address program-integrity concerns involving RPM and RTM services. CMS proposes to:</p> <ul> <li>Require RTM services to be furnished only to established patients, consistent with the existing requirement for RPM services, reasoning that an established patient relationship allows the practitioner to confirm that remote monitoring is medically necessary and to develop a treatment plan based on a prior evaluation of the patient.</li> <li>Require practitioners billing RPM or RTM services to furnish a separately reportable initiating visit in association with the onset of the remote monitoring services. The initiating visit would be required even when the patient has recently received another service from the practitioner, unless that service independently qualifies as the initiating visit.&nbsp;</li> <li>Pay for RPM and RTM treatment-management services only when the clinical staff furnishing the services are employed by the billing practitioner&rsquo;s practice. CMS expresses concern that arrangements involving third-party vendors may result in the billing practitioner exercising insufficient supervision or involvement in the patient&rsquo;s care.</li> </ul> <p>CMS also proposes to revise the valuation of certain RPM and RTM services based on its understanding that remote monitoring devices may now be available at lower costs than CMS originally estimated. CMS also seeks comments on whether it should replace the existing RPM and RTM CPT code families with four bundled HCPCS G-codes.&nbsp;</p> <p><strong>Medicare Telehealth Services List</strong>. CMS proposes to add five new HCPCS G-codes to the Medicare Telehealth Services List for CY27: (1) advance care planning furnished by clinical staff under the direction of a treating practitioner (HCPCS codes GACP1 and GACP2); (2) voluntary shared medical appointments involving groups of two to 10 patients with common medical conditions (HCPCS code GSMAS); (3) individual speech, language, voice, communication, or auditory-processing treatment furnished to pediatric patients (HCPCS code GSLPP); and (4) an add-on code for evaluation and management services involving the diagnosis and treatment of vaccine adverse effects (HCPCS code GADV1).</p> <p><strong>Telehealth Flexibilities and Modifiers</strong>. As discussed in our <a href="/en/perspectives/publications/2026/02/virtual-and-digital-health-digest">February 2026 digest</a>, Congress extended COVID-19-era Medicare telehealth flexibilities through December 31, 2027, as part of the Consolidated Appropriations Act (CAA), 2026. CMS proposes updates to its telehealth regulations to reflect the additional extension. As required by the CAA, 2026, CMS also proposes to establish new claims modifiers for telehealth services furnished through certain third-party virtual platforms and for telehealth services furnished incident to a physician&rsquo;s or practitioner&rsquo;s professional services.</p> <p><strong>Technology-Enabled Primary Care</strong>. CMS seeks comments on potential changes to the valuation and payment of primary care services, including how Medicare should account for technology used in primary care. Among other issues, CMS requests feedback on whether technology should be incorporated into primary care payment through existing service-level payments, prospective payments, or other payment arrangements. CMS also seeks comments on establishing prospective primary care payments through the Medicare Shared Savings Program and potentially more broadly in Original Medicare.</p> <p>Comments on the proposed rule are due September 14, 2026.</p> <p><strong>CY27 Medicare Hospital Outpatient Prospective Payment System (OPPS) Proposed Rule</strong>.&nbsp;On July 7, 2026, CMS <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/07/07/2026-13656/medicare-program-hospital-outpatient-prospective-payment-and-ambulatory-surgical-center-payment" target="_blank">published</a> the CY27 Medicare Hospital OPPS proposed rule. As it has in the past, the agency addresses artificial intelligence-enabled clinical software in its ongoing attempts to further develop OPPS payment policy for these technologies.</p> <p><strong>Software as a Medical Service</strong>. CMS proposes establishing a new payment framework for certain software-based medical technologies that use algorithms, including artificial intelligence, to perform diagnostic or other clinical functions. CMS would replace the term &ldquo;Software as a Service&rdquo; with &ldquo;Software as a Medical Service&rdquo; (SaMS) to distinguish these technologies from general cloud-based software and to recognize their role in furnishing medical services. CMS explains that existing Medicare payment methodologies may not adequately account for proprietary algorithms, licensing arrangements, and other non-material costs associated with these technologies.</p> <p>For CY27, CMS proposes to designate 36 HCPCS codes as SaMS services and generally assign separately payable codes to New Technology Ambulatory Payment Classifications. CMS also proposes a new OPPS status indicator, &ldquo;O1,&rdquo; for separately payable SaMS services. Services assigned status indicator O1 would receive a separate APC payment and would not be discounted when furnished with another procedure. CMS is seeking comment, however, on whether SaMS services should instead be subject to multiple-procedure payment reductions when more than one software-based analysis is performed during the same encounter.</p> <p>CMS also proposes moving certain stand-alone algorithmic analyses of laboratory data from the Clinical Laboratory Fee Schedule to the OPPS. Under the proposal, these services would be treated as &ldquo;other diagnostic tests&rdquo; and paid through New Technology APCs.&nbsp;</p> <p>The proposal represents an important step toward creating a distinct Medicare payment pathway for AI- and algorithm-based clinical services. Although CMS characterizes the framework as interim, the SaMS designation could shape future coding, payment, packaging, and program-integrity policies for digital health technologies. CMS also seeks comments on longer-term payment methodologies, including whether payment should be tied more closely to clinical outcomes and whether multiple-procedure payment reductions should apply.&nbsp;</p> <p>Comments on the proposed rule are due August 31, 2026.</p> <h2>EU and UK News</h2> <h3><a name="Regulatory Updates">Regulatory Updates</a></h3> <p><a rel="noopener noreferrer" href="https://ec.europa.eu/newsroom/sante/newsletter-archives/74172" target="_blank"></a><strong><a href="https://www.consilium.europa.eu/en/press/press-releases/2026/06/16/council-agrees-mandate-on-measures-to-advance-biotech-innovation-in-the-eu/" target="_blank">Council of the European Union (Council) Adopts Position on the EU Biotech Act I</a></strong>. The Council of the European Union has adopted its general approach on the European Commission&rsquo;s proposed <a rel="noopener noreferrer" href="https://health.ec.europa.eu/document/download/ec1475b7-e3f9-409e-b927-fc7e69306a8c_en?filename=biotech_reg-com2025-1022_act_en.pdf" target="_blank">Biotech Act Part I </a>(For more details on the European Commission proposal, read our<a href="/en/perspectives/publications/2026/01/virtual-and-digital-health-digest"> January 2026 Digest</a>). This general approach will serve as its negotiating mandate for trilogue discussions with the European Parliament, should they take place. Among the key amendments, the Council has clarified that, in the context of the processing of personal data, it may be considered to be carried out in the public interest where necessary to ensure patient safety, maintain high health care standards, or support cross-border analysis of transplant outcomes.</p> <p><strong><a rel="noopener noreferrer" href="https://www.efpia.eu/news-events/the-efpia-view/statements-press-releases/extending-supplementary-protection-certificate-spc-could-increase-european-rd-investment-tenfold/" target="_blank">European Federation of Pharmaceutical Industries and Associations (EFPIA) Publishes Its Position on the EC-Proposed EU Biotech Act Part I</a></strong>. The position welcomes key measures proposed by the EC, including a harmonized General Data Protection Regulation (EU) 2016/679 (GDPR) legal basis for clinical trial data processing, clearer and harmonized responsibilities regarding controllership of data under the GDPR, and the possibility for further use of clinical trial data for research purposes under certain conditions. At the same time, EFPIA calls for risk-based guidance from the European Medicines Agency and the European Medicines Regulatory Network on the use of AI models and systems.</p> <p><strong><a rel="noopener noreferrer" href="https://digital-strategy.ec.europa.eu/en/policies/code-practice-ai-generated-content" target="_blank">European Commission Publishes Code of Practice on Marking and Labeling AI-Generated Content</a></strong>. The code is voluntary, but it sets out practical steps to help providers and deployers of generative AI systems meet the AI Act transparency obligations that will apply from August 2, 2026. The AI Act will require clear labeling, particularly for deepfakes and AI-generated or AI-manipulated text published on matters of public interest. The European Commission has also created a<a rel="noopener noreferrer" href="https://digital-strategy.ec.europa.eu/en/policies/eu-icons-labelling-ai-generated-content" target="_blank"> set of icons</a> that deployers may use to label their AI-generated content. Providers and deployers of generative AI systems may sign up to the code using the <a rel="noopener noreferrer" href="https://digital-strategy.ec.europa.eu/en/library/how-sign-code-practice-transparency-ai-generated-content" target="_blank">signatory form</a>.</p> <p><strong><a rel="noopener noreferrer" href="https://health.ec.europa.eu/document/download/a80332cf-e9f0-4d45-8863-3d96e8c2a675_en?filename=mdcg_2026-4_en.pdf" target="_blank">European Commission&rsquo;s Medical Device Coordination Group (MDCG) Publishes Position Paper on Manufacturer Responsibility to Upload Summary of Safety and Clinical Performance (SSCP) and Summary of Safety and Performance (SSP) Documents in EUDAMED</a></strong>. The position paper clarifies the future responsibilities for uploading the SSCP and SSP to EUDAMED, the EU centralized database for medical devices and in vitro diagnostics. Under the current process, the SSCP and SSP documents are uploaded by the Notified Body when registering certificate information. The MDCG guidance <a rel="noopener noreferrer" href="https://health.ec.europa.eu/system/files/2022-03/md_mdcg_2019_9_sscp_en.pdf" target="_blank">MDCG 2019-9 Rev. 1</a> is being revised such that the manufacturer will have responsibility for uploading the SSCPs and SSPs in EUDAMED. It will also be the responsibility of the manufacturer to ensure the uploaded SSCP or SSP is the one validated by the Notified Body. The MDCG foresees a transition period whereby Notified Bodies will continue uploading the validated master SSCPs and SSPs until the new functionality is available in October 2026.</p> <p><strong><a rel="noopener noreferrer" href="https://www.medtecheurope.org/2026/06/04/medtech-europe-reaction-to-the-provisional-agreement-on-the-digital-omnibus-on-ai/" target="_blank">MedTech Europe Reaction to Provisional Agreement on the AI Digital Omnibus</a></strong>. MedTech Europe has reacted to the <a rel="noopener noreferrer" href="https://digital-strategy.ec.europa.eu/en/news/simpler-eu-digital-rules-and-new-digital-wallets-save-billions-businesses-and-boost-innovation" target="_blank">Digital Omnibus package</a> that was presented by the European Commission in November 2025, aiming to streamline rules on AI, cybersecurity, and data. MedTech Europe advocates for a sectoral approach for medical devices to avoid overlapping obligations. However, the provisional agreement does not include a sectoral approach for medical technologies, which remain subject to parallel requirements under both the AI Act and the Medical Devices Regulation 2017/745 (MDR)/In Vitro Diagnostic Regulation 2017/746 (IVDR). Some of MedTech Europe&rsquo;s other recommendations have been implemented, such as the postponement of the application of AI Act requirements for high-risk AI systems embedded in products, including medical technologies, from August 2026 to August 2028.</p> <p><strong><a rel="noopener noreferrer" href="https://digital-strategy.ec.europa.eu/en/news/ai-act-enforcement-gets-independent-expert-support" target="_blank">European Commission Appoints a Scientific Panel and an Advisory Forum to Support AI Act Enforcement</a></strong>. The two bodies will advise the European Commission&rsquo;s AI Office and national competent authorities on the implementation and enforcement of the AI Act. The Scientific Panel, comprising 60 independent experts, will provide advice on matters relating to, among others, general-purpose AI models and systems, systemic risks, model classification, evaluation methodologies, and cross-border market surveillance. The Advisory Forum, comprising representatives from academia, civil society, and industry, including small and medium-sized enterprises and startups, will provide advice on matters relating to, among others, standardization, AI literacy, and AI Act implementation.</p> <p><strong><a rel="noopener noreferrer" href="https://www.gov.uk/government/news/mhra-launches-ai-sandbox-to-accelerate-medicines-development-and-improve-safety" target="_blank">UK MHRA Launches AI Sandboxes to Accelerate Medicines Development</a></strong>. The MHRA has launched an initiative to test how AI can accelerate medicines development and improve safety. The program will allow innovators to test AI tools that have the potential to predict how medicines behave in the body, including how they are absorbed, processed, and whether they may cause harm. The MHRA intends to use this work to understand how reliable these AI tools are and whether they can be used to support decisions about the safety of new medicines. Up to five AI-driven approaches will be tested in the first phase. The MHRA will begin working with industry and academic partners over the coming months to shape how the sandbox operates. In addition, the MHRA is <a rel="noopener noreferrer" href="https://www.gov.uk/government/news/pioneering-ai-health-innovations-regulatory-sandbox-launched?utm_medium=email&amp;utm_campaign=govuk-notifications-topic&amp;utm_source=b9e0372b-8566-449d-bd97-de5f34b7323a&amp;utm_content=immediately" target="_blank">launching</a> a similar sandbox focused on London for up to 10 AI manufacturers, and will invite expressions of interest from AI medical device manufacturers in July 2026.</p> <p><strong><a rel="noopener noreferrer" href="https://assets.publishing.service.gov.uk/media/6a676af523e57bd0a0ea6852/AI_Airlock_Phase_2_Programme_Report_v2.pdf" target="_blank">UK MHRA Publishes Report on AI Airlock Sandbox Phase 2</a></strong>. The MHRA has published its report of Phase 2 of the AI Airlock regulatory sandbox, alongside <a rel="noopener noreferrer" href="https://www.gov.uk/government/publications/ai-airlock-simulation-workshops" target="_blank">three simulation workshop summary reports</a>. The program ran from April 2025 to March 2026 and worked with seven AI technologies across a range of clinical applications, including AI-powered clinical note-taking, advanced cancer diagnostics, rare eye disease detection, and obesity management systems. In a <a rel="noopener noreferrer" href="https://medregs.blog.gov.uk/2026/06/09/advancing-ai-regulation-in-healthcare-insights-from-ai-airlock-phase-2/" target="_blank">MedRegs blog post</a>, the MHRA notes that pre-market evidence needs to be designed with deployment conditions in mind, and post-market monitoring is critical for these technologies. The MHRA also states that clinical relevance should underpin performance metrics, as a consistent finding across candidate cases was that statistical significance did not always equate to clinical importance. The insights from the AI Airlock pilot phase were reported in the <a rel="noopener noreferrer" href="https://www.biosliceblog.com/2025/12/virtual-and-digital-health-digest-november-2025/" target="_blank">November 2025 Digest</a>.</p> <p><strong><a rel="noopener noreferrer" href="https://www.gov.uk/government/publications/national-commission-into-the-regulation-of-ai-in-healthcare-research-engagement-and-call-for-evidence-findings" target="_blank">UK MHRA Publishes Findings on National Commission&rsquo;s Research Into the Use of AI in Healthcare</a></strong>. The MHRA has published two reports summarizing the findings from the research and engagement activities of the National Commission into the Regulation of AI in Healthcare, as well as the outcome of the associated Call for Evidence (which we initially reported on in the <a rel="noopener noreferrer" href="https://www.biosliceblog.com/2026/01/virtual-and-digital-health-digest-december-2025/" target="_blank">December 2025 Digest</a>). In a <a rel="noopener noreferrer" href="https://www.gov.uk/government/news/mhra-landmark-report-reveals-public-views-on-ai-in-healthcare#full-publication-update-history" target="_blank">press release</a>, the MHRA says the overarching view from the engagement is a recognition of the potential benefits of AI in healthcare, provided that rules appropriately set standards for safety and efficacy. The MHRA also says there is a broad consensus that existing regulatory approaches need to be adapted to meet the rapid pace of change and development of AI technology. These reports will inform the AI commission&rsquo;s recommendations, which are due to be published later this year to assist the MHRA in shaping rules that protect patients and support innovation.&nbsp;</p> <p><strong><a rel="noopener noreferrer" href="https://mhrainspectorate.blog.gov.uk/2026/06/29/use-of-ai-for-gxp-inspection-responses-setting-standards-without-stifling-innovation/" target="_blank">UK MHRA Publishes Blog Post on Use of AI in GxP Inspection Responses</a></strong>. The MHRA has published a blog post on its position on the use of AI in submissions made to its compliance teams following GxP inspections. The post acknowledges that AI tools can support better regulatory outcomes and improve patient safety, but the agency has encountered responses containing references to MHRA guidance that does not exist, citations of inappropriate regulatory frameworks, and responses to serious deficiencies that appear designed to mislead rather than address underlying problems. The MHRA sets out several clarifications, stressing that all submissions must be accurate and supported by evidence. It also offers organizations the opportunity to voluntarily disclose AI use in responses to compliance teams, to help the MHRA understand how the sector is evolving. The MHRA says inspectors will consider this disclosure positively when assessing organizational compliance.</p> <p> </p> <h3><a name="Pricing and Reimbursement Updates">Pricing and Reimbursement Updates</a></h3> <p><strong><a rel="noopener noreferrer" href="https://www.gov.uk/government/publications/value-based-procurement-for-medical-technology/value-based-procurement-national-standard-guidance-for-medical-technology" target="_blank">UK Government Publishes Guidance for NHS Buyers Assessing Medical Technology</a></strong>. The UK government has published guidance for National Health Service (NHS) buyers on &ldquo;value based procurement&rdquo; when buying medical technology. The guidance provides a standard set of questions and scoring criteria to help assess the wider value of the technology, not just its purchase price. These other value criteria include benefits for productivity and efficiency in hospitals, patient experience and outcomes, staff experience and safety, the environment, and supply chain resilience. The guidance is intended for use at the quality assessment stage of the procurement process.</p> <h3><a name="Privacy Updates">Privacy Updates</a></h3> <p><a rel="noopener noreferrer" href="https://www.edpb.europa.eu/system/files/2026-04/edpb_guidelines_202601_scientificresearch_en.pdf" target="_blank"></a><strong><a href="https://ico.org.uk/about-the-ico/media-centre/news-and-blogs/2026/05/ico-response-to-government-on-safe-ai-powered-innovation/" target="_blank">UK ICO Sets Out AI Workplan Priorities in Response to Government Request</a></strong>. On May 29, 2026, the ICO published its response to a joint request from the Technology and Business Secretaries to set out a plan for enabling safe AI-powered innovation. The response builds on the ICO&rsquo;s June 2025 AI and biometrics strategy and confirms that its 2026/2027 workplan will focus on: developing an AI and automated decision-making (ADM) statutory code of practice (informed by the ADM consultation which closed on May 29, 2026, with final guidance due Summer 2026); publishing dedicated guidance on agentic AI; and supporting consumers navigating an increasingly personalized AI landscape. This is relevant to life sciences companies deploying AI-enabled tools in clinical, diagnostic, or patient-facing contexts, an area the ICO has previously flagged as a priority.</p> <p><strong><a rel="noopener noreferrer" href="https://ico.org.uk/about-the-ico/media-centre/news-and-blogs/2026/06/setting-out-our-expectations-for-the-smart-device-industry/" target="_blank">UK ICO Publishes Final Guidance on Consumer IoT Products and Services</a></strong>. On June 11, 2026, the ICO published its finalized guidance on consumer Internet of Things (IoT) products and services, following a 12-week consultation held last year. The guidance covers smart speakers, connected televisions, fitness trackers, wearables, smart doorbells, and other consumer connected devices, and applies to manufacturers, app developers, operating system providers, and cloud providers in the IoT supply chain (it does not cover smart meters, connected/autonomous vehicles, or enterprise/industrial IoT). It sets out expectations that privacy be built in by default, that consent be specific and as easy to withdraw as to give, and that most IoT processing will require a Data Protection Impact Assessment, with an even higher bar where children are likely users. This is relevant for life sciences companies developing consumer-facing wearables or health-monitoring devices that sit outside the medical device regulatory perimeter. The ICO has confirmed it is now turning its attention to connected televisions.</p> <p><span style="font-size: small;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{B9E5A254-8874-42F5-8D7F-51E6352ADE14}https://www.arnoldporter.com/en/perspectives/news/2026/07/arnold-porter-advises-panama-on-two-financings-totaling-2-9-billionArnold &amp; Porter recently advised the Republic of Panama on two separate sovereign financing transactions totaling &euro;2.9 billion, one with Banco Santander and the other with Merrill Lynch International, a Bank of America affiliate.Wed, 29 Jul 2026 00:00:00 -0500<p>Arnold &amp; Porter recently advised the Republic of Panama on two separate sovereign financing transactions totaling &euro;2.9 billion, one with Banco Santander and the other with Merrill Lynch International, a Bank of America affiliate.</p> <p>In the first transaction, Santander provided a &euro;1.2 billion loan bearing interest at a fixed rate of 4.83%. The proceeds were used to refinance debt scheduled to mature in 2027. In the second transaction, Merrill Lynch provided a &euro;1.7 billion loan bearing interest at a fixed rate of 4.67%. That financing comprised &euro;1.2 billion used to refinance additional debt scheduled to mature in 2027 and &euro;500 million of new financing.</p> <p>Together, the two transactions allowed Panama to address &euro;2.4 billion of its 2027 maturities in advance, extend the relevant debt maturities to 2031, and secure fixed-rate financing at rates below the Government&rsquo;s estimated cost of a comparable market issuance.</p> <p>The Arnold &amp; Porter team was led by partners Whitney Debevoise and Gregory Harrington, and included counsel Arturo Caraballo and senior associate Mateo Morris. Tax advice was provided by partner David Sausen and associate Lauren Olaya.</p>{C1340167-F4A1-464C-BF1D-9022A0BBF008}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/jami-vibbert-discusses-the-evolving-privacy-and-ai-landscape-in-law360Jami Vibbert, chair of Arnold &amp; Porter&rsquo;s Privacy, Cybersecurity &amp; Data Strategy practice, was quoted in two recent <em>Law360 </em>articles examining the rapidly evolving privacy, artificial intelligence, and data governance landscape.Wed, 29 Jul 2026 00:00:00 -0500<p>Jami Vibbert, chair of Arnold &amp; Porter's Privacy, Cybersecurity &amp; Data Strategy practice, was quoted in two recent<em> Law360 </em>articles examining the rapidly evolving privacy, artificial intelligence, and data governance landscape.</p> <p>In the article "Top Privacy and AI Developments of 2026: Midyear Report," Jami observed that "there is a new law that is impacting clients in this space almost every day," explaining that organizations are increasingly seeking guidance on navigating overlapping privacy and AI obligations. Rather than focusing on compliance with a single statute, she noted that clients are now asking, "Here's where we're moving with respect to technology and data, and how do we comply with all the different laws that may impact us?"</p> <p>In a follow-up article, "Data Privacy &amp; AI Issues To Watch For the Rest of 2026," Jami discussed the U.S. Supreme Court's pending review of the federal Video Privacy Protection Act, noting that the Court's decision could significantly shape future privacy litigation. She explained that the ruling could not only curb future VPPA claims but also help limit broader online tracking lawsuits if the Court indicates that "these older laws are not the right fit for addressing online tracking technology."</p> <p><a href="https://www.law360.com/articles/2494535/top-privacy-and-ai-developments-of-2026-midyear-report">Read "Top Privacy and AI Developments of 2026: Midyear Report"</a>&nbsp;(subscription required).</p> <p><a href="https://www.law360.com/articles/2505045/data-privacy-ai-issues-to-watch-for-the-rest-of-2026">Read "Data Privacy &amp; AI Issues To Watch For the Rest of 2026"</a>&nbsp;(subscription required).</p>{960E9127-230C-462C-8787-6315C08426DC}https://www.arnoldporter.com/en/perspectives/news/2026/07/arnold-porter-advises-honduras-in-815-7m-notes-offeringArnold &amp; Porter recently advised the Republic of Honduras in connection with its offering of US$815.7 million of 6.400% Notes due 2036.Wed, 29 Jul 2026 00:00:00 -0500<p>Arnold &amp; Porter recently advised the Republic of Honduras in connection with its offering of US$815.7 million of 6.400% Notes due 2036. </p> <p>In connection with the offering, Honduras previously announced a cash tender offer to repurchase outstanding 6.250% sovereign bonds maturing in 2027.</p> <p>The Arnold &amp; Porter team was led by counsel Arturo Caraballo and senior associate Valentina Garzon. Partner Whitney Debevoise also advised on the matter.*</p> <p><em>*Mateus Maia de Souza, a visiting attorney from Brazil, assisted the team with aspects of the deal. Mr. Maia is admitted to practice law only in Brazil and is not engaged in the practice of law in any U.S. jurisdiction.</em></p>{FCA32E82-721C-4D60-93A4-4751B033E0F3}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/sec-proposes-to-authorize-electronic-delivery-of-documentsSara Adlerhttps://www.arnoldporter.com/en/people/a/adler-sarasara.adler@arnoldporter.comJoel I. Greenberghttps://www.arnoldporter.com/en/people/g/greenberg-joel-ijoel.greenberg@arnoldporter.comOn July 16, 2026, the Securities and Exchange Commission (SEC) proposed Regulation E-Delivery, a new framework that would allow firms to satisfy many federal securities law delivery requirements through electronic delivery by default, without first obtaining recipients&rsquo; affirmative consent, provided certain notice, opt-out, and security requirements are met. The proposal would modernize and largely replace the SEC&rsquo;s longstanding electronic delivery guidance while introducing standardized requirements for electronic communications, including safeguards for personal financial information, procedures for failed deliveries, and transition rules for existing paper recipients. It would also amend or rescind several existing rules governing investment company shareholder reports, proxy materials, and tender offer communications, reflecting the SEC&rsquo;s broader effort to align securities regulation with current technology and investor communication preferences.Wed, 29 Jul 2026 00:00:00 -0500<p> </p> <p>On July 16, 2026, the SEC <a rel="noopener noreferrer" href="https://www.sec.gov/files/rules/proposed/2026/33-11430.pdf" target="_blank">proposed</a> Regulation E-Delivery (Reg E-Delivery), which if adopted would: (i) establish conditions under which the delivery requirements of the Federal securities laws could be satisfied by delivering information electronically (e-delivery) without the need to first obtain recipients&rsquo; affirmative consent; (ii) rescind the rule providing alternative means for registered investment companies to satisfy shareholder report transmission requirements; and (iii) amend rules addressing the dissemination of proxy and tender offer materials to facilitate consistency with the proposed new e-delivery framework. The proposal reflects the SEC&rsquo;s decades-long experience with the use of electronic media to provide investors with information, significant advances in electronic communication technologies, as well as studies on investor/stakeholder preferences.</p> <h2>Scope of Reg E-Delivery</h2> <p>The proposal addresses e-delivery to &ldquo;covered recipients&rdquo; of &ldquo;covered information&rdquo; by &ldquo;covered entities.&rdquo; A &ldquo;covered recipient&rdquo; would be any current or prospective customer, client, investor, security holder, counterparty, or similar recipient of information (other than the SEC, any other Federal or state regulator, or any self-regulatory organization (SRO)). &ldquo;Covered information&rdquo; would be any information required to be delivered to a covered recipient under the Federal securities laws, other than: (i) information required to be delivered under Regulation Crowdfunding, Exchange Act Rule 15c2-11 (which prohibits brokers from publication or submission for publication of quotations unless specified information is available), and Exchange Act Rule 15Fi-2(c) (acknowledgment and verification of security-based swap transactions), as each of the foregoing reflects a tailored e-delivery framework; (ii) information required to be filed with the SEC or otherwise made available generally to the public but not delivered to particular recipients, and (iii) disclosures made pursuant to any applicable state laws or the rules of SROs, including FINRA and the Municipal Securities Rulemaking Board.[[N:As a non-exhaustive list, covered information would include: fund prospectuses, fund annual and semi-annual shareholder reports, notices under Investment Company Act Rule 19a-1, issuer prospectuses, issuer annual reports to security holders, proxy statements and information statements, tender offer statements and solicitation/recommendation statements, offering circulars, bondholders&rsquo; lists and reports to security holders, trade confirmations, disclosures pursuant to Form CRS, Reg S-AM disclosures, Form ADV Part 2 Brochures, marketing and testimonial disclosures, agency cross transaction disclosures, and custody rule account statement notices.]] &ldquo;Covered entities&rdquo; would be any person that has an obligation to deliver covered information to a covered recipient under the Federal securities laws.[[N:This would include persons registered under the Exchange Act, the Investment Advisers Act, and the Investment Company Act, persons with a class of securities registered under the Exchange Act, persons conducting securities offerings registered or exempt from the registration requirements under the Securities Act, persons subject to the requirements of the Trust Indenture Act, as well as bidders for third-party tender offers and dissidents in contested proxy solicitations. However, persons that have delivery obligations to covered recipients pursuant only to the rules of SROs are not included within the scope of Reg E-Delivery.]] Reg E-Delivery would permit (but not require) covered entities to use e-delivery as the default method of delivery for covered information.</p> <h2>General Requirements</h2> <p>A covered entity would be able to rely on the proposed rule to use e-delivery to satisfy its delivery obligations for covered information (regardless of whether it elects to use e-delivery as a default or continues to require affirmative consent to e-delivery) if: (i) the covered recipient has provided an electronic address to receive covered information (or in the case of electronic addresses that are mobile applications, accepts to use);[[N:An electronic address is an identifier used to communicate with a covered recipient electronically, including: an email address; a mobile phone number; or any other means of electronic communication capable of receiving electronic delivery pursuant to an electronic delivery method that the rule sets forth and alerting a covered recipient that covered information is available. A covered recipient that provides an email address to a covered entity in the process of onboarding with that entity would be deemed to have &ldquo;provided&rdquo; that email address &ldquo;to receive covered information.&rdquo; Similarly, by using a mobile application or an online account to access covered information, a covered recipient has &ldquo;accepted to use&rdquo; that mobile application or online account.]] (ii) the covered entity has provided a prominent disclosure to the covered recipient that it will send covered information to the electronic address provided; and (iii) the covered recipient has not opted out of e-delivery. Covered entities may limit their use of e-delivery to certain covered information and/or to certain covered recipients (such as institutional investors). Although a covered entity may use a method of e-delivery that differs from those contemplated in Reg E-Delivery, so long as that method provides assurance of delivery comparable to paper delivery, use of the methods provided would assure that applicable delivery requirements under Federal Securities laws will have been satisfied.</p> <p>The proposal includes two methods of e-delivery: (i) direct delivery, and (ii) a statement of availability. A covered entity could electronically deliver covered information directly to a covered recipient&rsquo;s electronic address (e.g., attached to or included in the body of an email) only if it does not include personal financial information (PFI). Electronic delivery of covered information that includes PFI would require delivery to the covered recipient&rsquo;s electronic address of a statement of availability (which must not contain PFI, and must specify a website or mobile application where a covered recipient would be able to access the covered information that requires the use of a process reasonably designed to safeguard the PFI, such as passwords, two-factor authentication, biometrics, or cryptography). A covered entity also would be permitted to use this e-delivery method for covered information that does not include PFI. The statement of availability must include a prominent statement identifying the covered entity and the type of covered information that is available, a brief description of the covered information, whether the covered information may require action by the covered recipient within a fixed time frame to exercise certain rights, and whether the covered information is delivered by a person delivering on behalf of the covered entity. A message directly delivering covered information must include substantially the same information regarding the nature of the information being delivered. The website address relied upon for compliance with Reg E-Delivery may not be the SEC&rsquo;s website address.</p> <p>Regardless of the e-delivery method, the delivery of covered information would need to include a prominent statement explaining the process to (without charge): (i) obtain a paper version of the covered information upon request;[[N:Such request must be made during the period the covered entity is required to retain the covered information under the Federal securities laws (or during the preceding two years if there is no such requirement).]] (ii) opt out of e-delivery at any time with respect to all or a subset of covered information; and (iii) update one&rsquo;s electronic address. This statement must also direct a covered recipient to a website through which one can make these requests and updates. A covered entity that intends to e-deliver covered information by default would need to provide a clear and conspicuous disclosure to the covered recipient that describes the types of covered information that will be delivered electronically. If applicable, this disclosure must state whether a covered recipient&rsquo;s request for paper or to opt out of e-delivery could result in restrictions on or termination of the covered recipient&rsquo;s relationship with the covered entity. For the covered recipients that do not intend to pursue the default e-delivery model, the disclosure must inform them that they must affirmatively elect to receive covered information electronically if they so choose. Covered information must be delivered no later than the date by which it is required to be delivered under the Federal securities laws.</p> <p>The proposed rule would require covered entities to adopt written policies and procedures reasonably designed to identify and remediate failed e-delivery, including detecting an invalid or inoperable electronic address, and obtaining a new electronic address or delivering the covered information in paper format until the covered recipient provides a new electronic address.</p> <h2>Transition Process</h2> <p>A covered entity that wishes to transition current covered recipients receiving paper (for whom the covered entity has an electronic address) to default e-delivery would generally be required to provide a paper initial notice containing prescribed disclosures (including opt-out procedures) at least 180 days before the transition to default e-delivery, and a paper follow-up notice 30 days before the transition. However, a covered entity may begin using e-delivery at any time after the covered recipient updates or confirms an electronic address in response to the initial or follow-up notice. This transition requirement does not apply to covered recipients who already receive e-delivery for all covered information, or covered entities that do not wish to transition to default e-delivery for existing covered recipients.</p> <h2>E-Sign Act</h2> <p>To the extent that any covered information delivered under proposed Reg E-Delivery otherwise would have been subject to the consumer consent requirements of the Electronic Signatures in Global and National Commerce Act, Public Law 106-229 (114 Stat. 464) (2000) (the &ldquo;E-SIGN Act&rdquo;), such covered information would be exempt from such requirements.</p> <h2>Current E-Delivery Guidance</h2> <p>If the proposed rule is adopted, it would be the primary rule addressing e-delivery. Therefore, if adopted, Reg E-Delivery would supersede the SEC&rsquo;s 1995 and 1996 Guidance in their entirety (with certain principles reaffirmed in any release adopting Reg E-Delivery), with the majority of its 2000 Guidance retained, with only certain sections and examples superseded by Reg E-Delivery.[[N:Use of Electronic Media for Delivery Purposes, Investment Company Act Release No. 21399 (Oct. 6, 1995) &#91;60 FR 53458 (Oct. 13, 1995)&#93; (<a rel="noopener noreferrer" href="https://www.sec.gov/files/rules/interp/33-7233.txt" target="_blank">1995 Guidance</a>); Use of Electronic Media by Broker-Dealers, Transfer Agents, and Investment Advisers for Delivery of Information, Investment Company Act Release No. 21945 (May 9, 1996) &#91;61 FR 24644 (May 15, 1996)&#93; (<a rel="noopener noreferrer" href="https://www.sec.gov/files/rules/interp/33-7288.txt" target="_blank">1996 Guidance</a>); Use of Electronic Media, Investment Company Act Release No. 24426 (Apr. 28, 2000) &#91;65 FR 25843 (May 4, 2000)&#93; (<a rel="noopener noreferrer" href="https://www.sec.gov/rules-regulations/2000/04/use-electronic-media" target="_blank">2000 Guidance</a>).]]</p> <h2>Amendments to Current Rules</h2> <p>The proposal would rescind Rule 30e-3 under the Investment Company Act, which generally permits certain investment companies to satisfy shareholder report delivery requirements by making those reports available online and then providing a notice of that availability through a paper notice, such as a postcard, rather than directly mailing the report (or emailing an electronic version of the report or a link to the report) to shareholders.</p> <p>With respect to proxy materials, Reg E-Delivery would generally supersede the &ldquo;notice and access&rdquo; model currently provided by Exchange Act Rule 14a-16, by removing the ability to send a &ldquo;Notice of Internet Availability&rdquo; in paper (such that delivering a full set of proxy materials in paper would be the only alternative to direct e-delivery or e-delivery of a statement of availability). As shareholders would be able to access proxy materials more efficiently with direct e-delivery or e-delivery of a statement of availability of proxy materials, the related deadline in the current rule to send a notice 40 days in advance of the meeting date would no longer be necessary; regardless of the e-delivery method used, proxy materials would be required to be delivered no later than the date on which they are required to be delivered under the Federal securities laws. Accordingly, the deadline for delivering proxy materials for a routine annual meeting, whether delivered electronically or in paper, would generally be established by applicable state law. Proposed amended Rule 14a-16 would also remove the business combination exclusion, and update the means of conducting broker searches. In addition, the amended rule would remove certain content and other requirements deemed no longer necessary, but retain certain requirements specific to proxy materials, including the required legend, control/identification numbers, and deadlines for paper copy requests. Issuers would still be required to provide shareholders with a means to execute a proxy as of the time a statement of availability is first sent to shareholders.</p> <p>With respect to tender offers, the proposal would amend Exchange Act Rule 14d-5 to clarify that electronic delivery of tender offer materials is an acceptable method of dissemination and to further facilitate electronic delivery of tender offer materials.</p> <p>While the proposed rules are designed to allow shareholders to receive proxy materials and tender offer materials in the format they prefer, the proposed rules would not prevent an issuer or third party from supplementing the electronic delivery of proxy materials or tender offer materials with delivery of those materials in paper format.</p> <h2>Compliance Period</h2> <p>Under the proposal, there would be a two-year interim period before rescinding the SEC&rsquo;s 1995 and 1996 Guidance. After the publication of Reg E-Delivery, but before the effective date of such rescission, a covered entity could rely either on such guidance or on Reg E-Delivery when using e-delivery to satisfy delivery requirements under the Federal securities laws.</p> <p>Comments are due within 60 days after publication in the Federal Register.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{C2E6BEED-424B-4CAE-962A-2D140C8C1905}https://www.arnoldporter.com/en/perspectives/events/2026/07/how-the-us-government-is-buying-now-opportunities-and-key-considerations-for-technology-companiesSonia Tabrizhttps://www.arnoldporter.com/en/people/t/tabriz-soniasonia.tabriz@arnoldporter.comThomas A. Pettithttps://www.arnoldporter.com/en/people/p/pettit-thomasthomas.pettit@arnoldporter.comThis has been a dynamic time for companies that contract with the U.S. Government, or may be considering it.Tue, 28 Jul 2026 00:00:00 -0500<p>This has been a dynamic time for companies that contract with the U.S. Government, or may be considering it.</p> <p>Since President Trump took office, the administration has issued a series of executive orders and other directives calling for major changes in the way the U.S. Government purchases goods and services, with a focus on streamlining buying to enhance agility, effectiveness, and efficiency. While these measures apply broadly, the administration has made clear that the U.S. Government seeks to entice &ldquo;new entrants&rdquo; into the federal marketplace&mdash;such as through deregulation as well as prioritizing commercial and nontraditional contracting. For new entrants and longstanding contractors alike, these changes are challenging to navigate, but may present new opportunities.</p> <p>During our program, we will walk through recent developments, this administration&rsquo;s procurement priorities, and how to consider various risk areas when assessing opportunities to contract with the U.S. Government.</p>{A537769F-E58E-498C-8023-4DC99FE09535}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/lisa-re-talks-hhs-fraud-enforcement-with-report-on-medicare-complianceLisa Re, Arnold &amp; Porter Life Sciences &amp; Healthcare Regulatory partner and former Assistant Inspector General for Legal Affairs at the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG), was quoted in the <em>Report on Medicare Compliance</em> article, &ldquo;Exclusions May Climb as HHS Expands Authority to CMS; HHS Pauses $1B in Medicaid Payments,&rdquo; discussing several HHS announcements at its press conference on July 21, 2026.Tue, 28 Jul 2026 00:00:00 -0500<p>Lisa Re, Arnold &amp; Porter Life Sciences &amp; Healthcare Regulatory partner and former Assistant Inspector General for Legal Affairs at the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG), was quoted in the <em>Report on Medicare Compliance</em> article, &ldquo;Exclusions May Climb as HHS Expands Authority to CMS; HHS Pauses $1B in Medicaid Payments,&rdquo; discussing several HHS announcements at its press conference on July 21, 2026.</p> <p>Regarding the department&rsquo;s decision to pause more than $1 billion in federal Medicaid payments to California and Minnesota, Lisa emphasized the significance of the move. </p> <p>&ldquo;This should get everyone&rsquo;s attention,&rdquo; she said. &ldquo;It seems they are using every tool at their disposal to make the point they demand proper payments.&rdquo; </p> <p>She also highlighted HHS-OIG&rsquo;s announcement that it is reviewing the performance of all state Medicaid Fraud Control Units (MFCUs), emphasizing that providers submitting Medicaid claims should use this as an opportunity to conduct their own risk assessments.</p> <p>&ldquo;Enforcement in Medicaid is a top priority for this administration,&rdquo; Lisa said. &ldquo;This is the time to invest in internal auditing.&rdquo;&nbsp;</p> <p><a href="https://assets.hcca-info.org/Portals/0/PDFs/Publications/report-on-medicare-compliance-v35n27%20%5b07-27-2026%5d.pdf?utm_medium=email&amp;_hsenc=p2ANqtz-_AhawGgTY6CLBNo1zmHFLyjP-KYK1TwYrtxgWa05rrWTFnhoW5HNGs6fKvlolnShv5RqEa2B4btAS9BHexAVyRY3m_qzfA2rqKezoU3Ihqg2mDc2Y&amp;_hsmi=430307723&amp;utm_content=430307723&amp;utm_source=hs_email">Read the full article.</a></p>{02B4A845-634F-46A1-9FEF-3F90F830BB1C}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/stacey-halliday-and-jennifer-kwapisz-discuss-oregon-epr-trial-with-packaging-diveArnold &amp; Porter Environmental partner Stacey Halliday and Product Liability Litigation partner Jennifer Kwapisz were quoted in the recent<em> Packaging Dive</em> article, &ldquo;Oregon EPR trial: What to watch next,&rdquo; discussing<em> National Association of Wholesaler-Distributors v. Feldon</em>, the first extended producer responsibility lawsuit to go to trial.Tue, 28 Jul 2026 00:00:00 -0500<p>Arnold &amp; Porter Environmental partner Stacey Halliday and Product Liability Litigation partner Jennifer Kwapisz were quoted in the recent <em>Packaging Dive</em> article, &ldquo;Oregon EPR trial: What to watch next,&rdquo; discussing<em> National Association of Wholesaler-Distributors v. Feldon</em>, the first extended producer responsibility lawsuit to go to trial. </p> <p>Jennifer emphasized that the upcoming post-trial briefing will be particularly useful in expanding on the parties&rsquo; legal arguments.</p> <p>&ldquo;Very often, courts, when they do draft their opinions, will pay very close attention to that post-trial briefing and to the authorities that are cited in there,&rdquo; she said. &ldquo;The post-trial briefing is where we&rsquo;ll see the most comprehensive set of arguments and evidence laid out.&rdquo;</p> <p>Stacey noted that the outcome of the trial also has implications for producers&rsquo; compliance programs, as it remains unclear exactly how the joint enforcement by the Oregon Department of Environmental Quality (DEQ) and Circular Action Alliance Oregon (CAA) may unfold.&nbsp;</p> <p>&ldquo;My interest is in watching to what extent there will be more transparency around the enforcement process from CAA and DEQ to delineate those separate roles, particularly given the increased scrutiny of their oversight of the EPR program during litigation,&rdquo; she said.</p> <p><a href="https://www.packagingdive.com/news/oregon-extended-producer-responsibility-trial-next-steps/825749/?utm_source=Sailthru&amp;utm_medium=email&amp;utm_campaign=Issue:%202026-07-21%20Packaging%20Dive%20%5Bissue:87229%5D&amp;utm_term=Packaging%20Dive">Read the full article.</a></p>{4A9AE970-6DFD-47D1-9E7C-E8FA2D4BE50D}https://www.arnoldporter.com/en/perspectives/news/2026/07/arnold-porter-grows-international-trade-commission-litigation-practice-with-partner-brian-hill<strong>WASHINGTON, D.C., July 27, 2026</strong> &mdash; Arnold &amp; Porter announced today that Brian Hill has joined the Intellectual Property practice as a partner, focused on U.S. International Trade Commission (ITC) matters. Brian will reside in the firm&rsquo;s Washington, D.C. office.Mon, 27 Jul 2026 00:00:00 -0500<p><strong>WASHINGTON, D.C., July 27, 2026</strong> &mdash; Arnold &amp; Porter announced today that Brian Hill has joined the Intellectual Property practice as a partner, focused on U.S. International Trade Commission (ITC) matters. Brian will reside in the firm&rsquo;s Washington, D.C. office.</p> <p>Evan Rothstein, co-chair of the firm&rsquo;s Intellectual Property practice group, said: &ldquo;Brian is an established authority and thought leader in the specialized area of ITC matters. He regularly leads complex investigations for brand name clients on both sides of the aisle. As patent litigation increasingly includes attendant Section 337 investigations at the ITC, Brian&rsquo;s arrival will enhance the group&rsquo;s capabilities to provide full-service IP advice and counsel, especially in our robust ITC practice in Washington, D.C.&rdquo; </p> <p>Brian is an intellectual property litigator with an emphasis on cross-border technology and life sciences disputes. He devotes a significant portion of his practice to unfair import investigations before the ITC, drawing on extensive experience spanning dozens of Section 337 matters. In addition to patent and trademark cases, his ITC experience includes trade secret theft, unfair competition under the Lanham Act, and antitrust allegations. In life sciences, Brian has had success using Section 337 to address counterfeit medical devices entering the U.S. supply chain as well as falsely advertised and mislabeled pharmaceuticals. Earlier in his career, Brian worked at the ITC and at the U.S. Patent and Trademark Office.</p> <p>In joining the firm, Brian said: &ldquo;Arnold &amp; Porter has key strengths in IP litigation and representing clients before federal agencies, which matters enormously at the ITC, where the two are inseparable. I look forward to working with new colleagues to continue growing the firm&rsquo;s ITC strength, particularly in the technology and life sciences industries.&rdquo;</p> <p>Before joining Arnold &amp; Porter, Brian was a partner at another Am Law 100 firm. Brian earned his J.D. from the University of Maryland School of Law, <em>cum laude</em>, his M.A. from Columbia University, and his B.S. from the University of Delaware.</p> <h3>About Arnold &amp; Porter</h3> <p><em>Arnold &amp; Porter combines sophisticated regulatory, litigation, and transactional capabilities to resolve clients&rsquo; most complex issues. With over 1,000 lawyers practicing in 16 offices worldwide, we offer an integrated approach that spans more than 40 practice areas. Through multidisciplinary collaboration and focused industry experience, we provide innovative and effective solutions to mitigate risks, address challenges, and achieve successful outcomes.</em></p>{E0C1079F-53A7-4308-ABCD-70DF2E51F23B}https://www.biosliceblog.com/2026/07/the-eu-packaging-and-packaging-waste-regulation-why-life-sciences-companies-should-act-now/Fabien Royhttps://www.arnoldporter.com/en/people/r/roy-fabienfabien.roy@arnoldporter.comTom Foxhttps://www.arnoldporter.com/en/people/f/fox-tomTom.Fox@arnoldporter.comCamille Vermosenhttps://www.arnoldporter.com/en/people/v/vermosen-camillecamille.vermosen@arnoldporter.comMon, 27 Jul 2026 00:00:00 -0500{10EDE98B-8C44-4517-82DA-0DDAB69EA7A3}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/china-compliance-update-anti-corruption-summer-2026John Tanhttps://www.arnoldporter.com/en/people/t/tan-johnjohn.tan@cn.arnoldporter.comSiyi Guhttps://www.arnoldporter.com/en/people/g/gu-siyisiyi.gu@cn.arnoldporter.comAnti-corruption remained a top priority for Chinese authorities in the first half of 2026. Regulators issued the first major update to the official judicial interpretation of China&rsquo;s criminal bribery framework in a decade, took further steps to implement the revised Anti-Unfair Competition Law (AUCL), and kept up a robust pace of anti-corruption enforcement.Fri, 24 Jul 2026 00:00:00 -0500<p>Anti-corruption remained a top priority for Chinese authorities in the first half of 2026. Regulators issued the first major update to the official judicial interpretation of China&rsquo;s criminal bribery framework in a decade, took further steps to implement the revised Anti-Unfair Competition Law (AUCL), and kept up a robust pace of anti-corruption enforcement.</p> <h2>Legislative Updates</h2> <h3>New SPC/SPP Judicial Interpretation on Corruption and Bribery</h3> <p>On April 10, 2026, the Supreme People&rsquo;s Court (SPC) and the Supreme People&rsquo;s Procuratorate (SPP) jointly issued the <a rel="noopener noreferrer" href="https://www.court.gov.cn/fabu/xiangqing/497181.html" target="_blank">Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Corruption and Bribery (II) (Interpretation (II)</a>, 关于办理贪污贿赂刑事案件适用法律若干问题的解释（二）).[[N:&nbsp;For further analysis of the Interpretation (II), see <a href="/en/perspectives/advisories/2026/04/china-compliance-update-anti-corruption-spring-2026">China Compliance Update: Anti-Corruption &mdash; Spring 2026</a>.&nbsp;]] It took effect on May 1, 2026, and is the first major update to the prior interpretation of the criminal law of bribery released by the SPC and SPP in a decade. It follows other recent changes to China&rsquo;s anti-corruption rules, including amendments to the PRC Criminal Law, the AUCL, and the Supervision Law.</p> <p>The Interpretation (II) focuses on private-sector crimes and &ldquo;entity crimes,&rdquo; meaning crimes that carry liability for companies, public institutions, government agencies, and other organizations. Notably, the Interpretation (II) lowers the thresholds of bribery and corruption crimes for non-state functionaries[[N: &ldquo;State functionaries&rdquo; is a term referring not only to government officials, but which also includes other individuals who perform public duties in state-owned enterprises and public institutions. See Article 93 of the PRC Criminal Law.]] and revises the standards for entity crimes and key sectors. </p> <h3>SAMR Notice on Enforcement of the Revised AUCL</h3> <p>The revised AUCL took effect on October 15, 2025.[[N: For further analysis of the revised AUCL, see <a href="/en/perspectives/advisories/2025/07/china-compliance-update-summer-2025">China Compliance Update &mdash; Summer 2025</a>]] Following that, the State Administration for Market Regulation (SAMR) issued the <a rel="noopener noreferrer" href="https://www.samr.gov.cn/zw/zfxxgk/fdzdgknr/jjjzs/art/2026/art_84f7d42f9e474529bd4c369e84721300.html" target="_blank">Notice on Further Implementing the Anti-Unfair Competition Law of the People&rsquo;s Republic of China</a> (Notice, 市场监管总局关于进一步贯彻实施《中华人民共和国反不正当竞争法》的通知) to lower level Administrations for Market Regulation (AMR) on March 30, 2026. The Notice took immediate effect.</p> <p>The Notice provides guidance to AMRs on areas of emphasis when enforcing the revised AUCL, including an emphasis on investigating and punishing both the payment of bribes and the acceptance of bribes. This focus on both sides of corrupt transactions is an important change in the revised AUCL. The previous version of the AUCL did not explicitly prohibit accepting bribes and did not explicitly list administrative penalties for companies or individuals which accepted bribes, even though such conduct was, in practice, frequently the focus of enforcement actions. The revised AUCL filled this gap, bringing it in line with recent years&rsquo; enforcement trends in China.</p> <p>Another key area of emphasis in the Notice is Article 40 of the revised AUCL, the &ldquo;long-arm jurisdiction&rdquo; clause. The Notice encouraged AMRs to explore the use of extraterritorial jurisdiction to target false advertising, online unfair competition, commercial defamation, trade secret misappropriation, and other misconduct outside of China that disrupts China&rsquo;s market order or harms domestic rights holders, to safeguard the domestic supply chain and the interests of Chinese companies and the state. However, the SAMR has not provided further guidance on how extraterritorial jurisdiction should be exercised in the context of the revised AUCL. </p> <p>With the publication of the Notice, we anticipate more stringent enforcement actions targeting commercial bribery by the AMR, as well as efforts by local AMRs to implement extraterritorial jurisdiction. </p> <h2>Enforcement Cases</h2> <p>Official statistics released in the first half of 2026 confirm that Chinese regulators remained focused on anti-corruption enforcement.</p> <p><a rel="noopener noreferrer" href="https://www.ccdi.gov.cn/toutiaon/202604/t20260422_486590.html" target="_blank">In the first quarter of 2026</a>, discipline inspection and supervisory commissions opened 245,000 cases and disciplined 183,000 people, including 56 provincial- or ministerial-level officials. In line with the principle of &ldquo;investigating bribe givers and bribe takers together&rdquo; (受贿行贿一起查), authorities opened investigations into 9,066 individuals suspected of paying bribes and referred 983 for prosecution.</p> <p>Three senior officials were investigated, arrested, or charged with crimes of bribery in the first half of 2026:</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ccdi.gov.cn/toutiaon/202604/t20260430_488453.html" target="_blank">Huiman Yi</a> (易会满), former Chairman of the China Securities Regulatory Commission (CSRC) from 2019 to 2024. On April 30, 2026, the Central Commission for Discipline Inspection (CCDI) announced that Yi was subject to disciplinary actions, including being expelled from the Communist Party and removed from any public duty, following a corruption investigation. In addition, Yi&rsquo;s case has been transferred to the procuratorate for criminal charges. According to the CCDI, Yi abused his regulatory authority to seek benefits for others in matters including IPO approvals and financing activities, while accepting substantial bribes and allowing relatives to profit from his influence.&nbsp;</li> <li><a rel="noopener noreferrer" href="https://www.spp.gov.cn/spp/qwfb/202603/t20260317_724127.shtml" target="_blank">Chaoliang Jiang</a> (蒋超良), former Communist Party Secretary of Hubei Province. <a rel="noopener noreferrer" href="https://www.ccdi.gov.cn/yaowenn/202510/t20251027_455162.html" target="_blank">Jiang was prosecuted for bribery and corruption</a> on March 17, 2026. This investigation reaches back more than 30 years to Jiang&rsquo;s time in the financial sector. He is accused of using his roles at the Agricultural Bank of China, China Development Bank, and the Hubei provincial government to provide improper help with loans, project approvals, and personnel decisions. The case has been publicly labeled &ldquo;family-style corruption&rdquo; (家族式腐败) because his relatives allegedly played a central role as conduits for concealed benefits.</li> <li><a rel="noopener noreferrer" href="https://www.ccdi.gov.cn/toutiaon/202607/t20260714_501375.html" target="_blank">Xingrui Ma</a> (马兴瑞), former Politburo member and Communist Party Secretary of Xinjiang Uygur Autonomous Region. On July 14, 2026, Ma was expelled from the Communist Party and removed from public office following a corruption investigation. The CCDI found him to have abused his position to benefit others in business operations, engineering projects, and personnel matters in exchange for substantial bribes, while allowing relatives to exploit his influence for personal gain. Ma&rsquo;s case has been referred for criminal prosecution.</li> </ul> <p>These cases illustrate Chinese regulators&rsquo; continued emphasis on scrutinizing officials&rsquo; family members in 2026. This has been the enforcement focus of bribery and corruption by government and party officials in recent years, particularly since the issuance of the Report at the 20th National Congress of the Communist Party of China in October 2022, which explicitly required enhanced scrutiny over corruption cases involving officials&rsquo; family members, including their spouses, children, and other relatives. </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{E10A5876-6D93-4EE7-82B7-45B5C3E5B832}https://www.arnoldporter.com/en/perspectives/events/2026/07/oversight-risks-from-the-next-congress-what-to-expect-and-what-companies-should-do-nowRachel F. Cottonhttps://www.arnoldporter.com/en/people/c/cotton-rachel-frachel.cotton@arnoldporter.comMark Epleyhttps://www.arnoldporter.com/en/people/e/epley-markmark.epley@arnoldporter.comThe next Congress could bring dramatic changes to oversight priorities, investigative targets, and political scrutiny.Thu, 23 Jul 2026 00:00:00 -0500<p>The next Congress could bring dramatic changes to oversight priorities, investigative targets, and political scrutiny. Join the bipartisan leaders of Arnold &amp; Porter&rsquo;s congressional investigations practice, Rachel Cotton and Mark Epley, alongside Michael Czin and Jill Zuckman of leading public affairs firm SKDK, for a timely look at the oversight risks ahead&mdash;and the steps organizations should take to be prepared.</p> <h2>Speakers</h2> <p>Rachel Cotton and Mark Epley co-lead Arnold &amp; Porter&rsquo;s bipartisan congressional investigations practice. Rachel draws on her experience in senior Executive Branch legal roles, including in the White House Counsel&rsquo;s Office, to advise companies and executives facing high-profile government scrutiny and investigations. Mark brings more than two decades of experience leading congressional investigations and oversight matters, helping clients navigate complex inquiries, crisis situations, and significant legal, political, and reputational risks.</p> <p><a rel="noopener noreferrer" href="https://skdknick.com/about/people/jill-zuckman/" target="_blank">Jill Zuckman</a> and <a rel="noopener noreferrer" href="https://skdknick.com/about/people/michael-czin/" target="_blank">Michael Czin</a> co-lead SKDK&rsquo;s investigations and oversight practice. Jill has more than two decades of experience as a national political reporter, senior government official, and advisor to leading companies. Michael works at the intersection of politics, policy, and investigations, supporting CEOs and boards navigating complex, long-term investigations in a range of fields.</p>{266FBD0A-624B-46D5-97E3-C2EECC5776CC}https://www.arnoldporter.com/en/perspectives/news/2026/07/chambers-high-net-worth-2026-recognizes-arnold-porters-lawyers-and-private-client-servicesThe 2026 edition of <em>Chambers High Net Worth</em> recognized Arnold &amp; Porter&rsquo;s private wealth law capabilities and ranked three of its lawyers. The guide highlights the top lawyers and law firms working with the international private wealth market.Thu, 23 Jul 2026 00:00:00 -0500<p>The 2026 edition of <em>Chambers High Net Worth</em> recognized Arnold &amp; Porter&rsquo;s private wealth law capabilities and ranked three of its lawyers. The guide highlights the top lawyers and law firms working with the international private wealth market.</p> <p><em>Chambers High Net Worth</em> 2026 ranked the firm&rsquo;s Private Client Services practice in the area of D.C. Private Wealth Law, noting the firm is distinguished by its &ldquo;caliber of its partners&rdquo; and their ability to &ldquo;resolve complex estate issues to maximize the most favorable outcomes&rdquo; for their clients.</p> <p>In addition to the practice ranking, <em>Chambers High Net Worth</em> 2026 also recognized the following lawyers:</p> <ul> <li>Sarah Constantine&mdash;Private Wealth Law (New York)</li> <li>Cara Koss&mdash;Private Wealth Law (D.C.)</li> <li>Thomas Richardson&mdash;Private Wealth Law (D.C.); Private Wealth Law: Eastern Region (Nationwide)</li> </ul>{4E4D5984-E148-45CA-B6BC-4BF4C0C20981}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/colorado-narrows-its-ai-law-but-the-ftc-says-thats-not-enoughSheena Thomashttps://www.arnoldporter.com/en/people/t/thomas-sheenasheena.thomas@arnoldporter.comAlyssa T. Calceranohttps://www.arnoldporter.com/en/people/c/calcerano-alyssaalyssa.calcerano@arnoldporter.com<p>Colorado has significantly scaled back its pioneering artificial intelligence (AI) law, replacing its original, risk-management-focused framework with a more streamlined, disclosure-based approach that takes effect January 1, 2027, while broader state AI regulation continues to evolve in different directions. Although the revised law reduces compliance burdens by eliminating mandatory impact assessments and risk management programs, it still imposes important notice, transparency, and human-review obligations for businesses using automated decision-making tools in areas such as employment, lending, healthcare, insurance, and education. At the same time, the Federal Trade Commission has suggested the law may be preempted by federal law, creating additional uncertainty and making it essential for companies to prepare for compliance while closely monitoring forthcoming rulemaking and federal developments.</p>Thu, 23 Jul 2026 00:00:00 -0500<p> <p><span> <p>Artificial intelligence (AI) regulation is fragmenting. In recent years, several states, including Utah, Texas, Virginia, and Connecticut, have passed first-of-their-kind AI laws. Some have since narrowed those original laws, while others have blocked or expanded them. In May, Colorado joined the states that have scaled back, dramatically narrowing its approach by replacing its original AI law, SB 24-205, with a lighter disclosure-focused framework, SB 26-189, weeks before that original AI act was set to take effect on June 30, 2026. Adding to the complexity, the Federal Trade Commission (FTC) recently issued a proposed policy statement suggesting that even Colorado&rsquo;s scaled-back law may be preempted by federal law, creating uncertainty for businesses planning their compliance approach. This Advisory analyzes Colorado&rsquo;s pivot and offers practical guidance for businesses navigating the new law. Companies using automated tools for high-risk decisions (employment, lending, insurance, healthcare, or education) should assess their compliance obligations under these emerging state laws. Those serving Colorado consumers should prioritize near-term compliance planning, as should any company using such tools in employment decisions, given the overlap with Connecticut and other emerging state laws.</p> <h2>What Did Colorado&rsquo;s Original AI Statute Require?</h2> <p>In 2024, Colorado enacted comprehensive legislation targeting &ldquo;high-risk artificial intelligence systems,&rdquo; defined as &ldquo;any artificial intelligence system that, when deployed, makes or is a substantial factor in making, a consequential decision.&rdquo;[[N:S.B. 24-205 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1701(9)(a)) (repealed 2026).]]</p> <p>Specifically, SB 24-205 imposed duties on deployers (companies that use AI systems) and developers (companies that create those AI systems), including a duty to avoid &ldquo;algorithmic discrimination&rdquo; and to disclose the use of AI systems to consumers.[[N:Id. &sect;&sect; 6-1-1702, 6-1-1703, 6-1-1704 (repealed 2026).]] To avoid such discrimination, deployers of high-risk AI systems were required to implement a risk management policy to govern deployment of the system and complete a detailed impact assessment.[[N:Id. &sect;&sect; 6-1-1703(2)(a)(I)(A), (3) (repealed 2026). The impact assessment was required to include, among other things, the intended use cases for the AI system, the reasonably foreseeable risks of such discrimination, the categories of data it would process, an overview of the categories of data used, its known limitations, a description of any transparency measures, and a description of &ldquo;post-deployment monitoring and user safeguards.&rdquo; Id. &sect; 6-1-1703(3)(a)-(b) (repealed 2026).]]</p> <p>SB 24-205 required deployers to notify consumers before a high-risk AI system was used to make a &ldquo;consequential decision.&rdquo;[[N:S.B. 24-205 &sect; 1 (to be codified at Colo. Rev. Stat. &sect; 6-1-1703(4)(a)(I)) (repealed 2026).]] That notice had to include the purpose for using the system, the nature of the decision, and information about the consumer&rsquo;s right to opt out of profiling.[[N:Id. &sect; 6-1-1703(4)(a) (repealed 2026).]] The law also imposed a post-hoc disclosure requirement: deployers had to explain the decision-making process for any consequential decisions made using high-risk AI systems.[[N:Id. &sect; 6-1-1703(4)(b)(I)(A)-(C) (repealed 2026).]]</p> <h2>Why Did Colorado Replace the Original AI Statute?</h2> <p>SB 24-205 was originally scheduled to take effect February 1, 2026.[[N:See S.B. 24-205 (repealed 2026).]] However, the law faced criticism from industry, and efforts to amend it during the 2025 regular session stalled.[[N:Marianne Goodland, <a rel="noopener noreferrer" href="https://www.coloradopolitics.com/2025/10/15/gov-polis-convenes-new-working-group-to-address-colorados-lingering-ai-law-challenges/" target="_blank">Gov. Polis convenes new working group to address Colorado&rsquo;s lingering AI law challenges</a>, Colo. Pol. (Oct. 15, 2025).]] Governor Polis called a special legislative session in August 2025 to force a resolution before the February deadline, but similar criticism stalled each of the proposed bills.[[N:Id.]] Days before the special session closed, Senate Majority Leader Robert Rodriguez proposed a delay, pushing the effective date to June 30, 2026.[[N:Id.; S.B. 25B-004, 75th Gen. Assemb., 1st Extraordinary Sess. (Colo. 2025).]]</p> <p>That failed special session prompted the Colorado AI Policy Work Group (Work Group), a stakeholder body of industry representatives, consumer advocates, hospitals, school districts, and technology companies convened by Governor Polis, to negotiate a full policy framework built around the new June 30 deadline.[[N:See Goodland, <em>supra</em> note 8.]]</p> <p>Those negotiations played out against a backdrop of federal pressure, including a December 2025 executive order critical of state algorithmic-discrimination laws and a federal lawsuit challenging SB 24-205 on constitutional grounds.[[N:Office of Public Affairs, <a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-intervenes-xai-lawsuit-challenging-colorados-algorithmic-discrimination" target="_blank">Justice Department Intervenes in xAI Lawsuit Challenging Colorado&rsquo;s &lsquo;Algorithmic Discrimination&rsquo; Law</a>, U.S. Dep&rsquo;t of Justice (Apr. 24, 2026).]] The lawsuit resulted in a stay of enforcement (not on the merits, but because the law was likely to be superseded by the Work Group&rsquo;s proposed bill), which became the basis for SB 26-189.</p> <p>Colorado&rsquo;s shift was part of a broader pattern of state-level AI regulation. California set the early baseline for automated decision-making technology (ADMT)-specific regulation, having adopted detailed rules governing ADMT under the California Consumer Privacy Act in 2025.[[N:Cal. Code Regs. tit. 11, art. 11 (2025).]]</p> <p>However, several states have recently scaled back or blocked AI legislation: Utah amended its Artificial Intelligence Policy Act in 2025 to narrow disclosure requirements and add a safe harbor for companies following recognized compliance frameworks;[[N:S.B. 149, 2024 Gen. Sess. (Utah 2024); S.B. 226, S.B. 332, H.B. 452, S.B. 271 (all amending the UAIPA).]] Texas softened its original AI law by requiring both intent and adverse outcome for discrimination claims;[[N:<em>Compare</em> H.B. 149, 89th Leg., Reg. Sess. (Tex. 2025) <em>with</em> H.B. 1709, 89th Leg., Reg. Sess. (Tex. 2025).]] and Virginia&rsquo;s governor vetoed that state&rsquo;s AI bill in March 2025, calling it &ldquo;burdensome&rdquo; to the industry.[[N:Va. Legis. Info. Sys., <a rel="noopener noreferrer" href="https://lis.virginia.gov/bill-details/20251/HB2094/text/HB2094VG" target="_blank">Governor&rsquo;s Veto</a>; Dean Mirshahi, <a rel="noopener noreferrer" href="https://www.vpm.org/generalassembly/2026-02-23/virginia-ai-bills-hayes-maldonado-salim-trump-spanberger" target="_blank">Most artificial intelligence legislation in Virginia was tabled until 2027</a>, VPM (Feb. 23, 2026, 5:10 PM EST).]] </p> <p>Diverging from the trend, Connecticut passed the Connecticut Artificial Intelligence Responsibility and Transparency Act, focusing on regulation of AI use for employment decisions.[[N:An Act Concerning Online Safety, 2026 Conn. Pub. Acts 26-15 (codification pending) (originally introduced as Substitute S.B. 5, 2026 Gen. Assemb., Reg. Sess. (Conn. 2026)).]] The act amends the state&rsquo;s anti-discrimination statute to preclude ADMT use as a defense to employment discrimination claims and make available proactive anti-bias testing as a mitigating factor for courts to consider.[[N:2026 Conn. Pub. Acts 26-15.]] It also creates whistleblower protections for employees of frontier developers, regulates AI chatbots, and requires content provenance markers on AI-generated media.[[N:Id.]]</p> <h2>How Does the Colorado Revised Act Differ From the Original?</h2> <p><strong>Covered Technologies</strong>: SB 26-189 redefines the universe of covered technology. SB 24-205 covered &ldquo;high-risk artificial intelligence systems,&rdquo; defined as any AI system that, when deployed, makes or is a substantial factor in making, a consequential decision.[[N:S.B. 24-205 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1701(9)(a)) (repealed 2026).]] SB 26-189 instead applies to &ldquo;covered&rdquo; ADMT, defined as automated decision-making technology that processes personal data and is used to materially influence a consequential decision.[[N:S.B. 26-189 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1701(2)(a), (5)).]] While &ldquo;artificial intelligence systems&rdquo; was defined specifically as &ldquo;machine-based system[s] that &hellip; infer[] from the inputs &hellip; receive[d] how to generate outputs,&rdquo; ADMT is broadly defined as &ldquo;a technology that processes personal data and uses computation to generate output.&rdquo;[[N:<em>Compare</em> S.B. 24-205 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1701(2)) (repealed 2026) <em>with</em> S.B. 26-189 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1701(2)(a)).]] Thus, a broader range of technologies is now covered by the law.</p> <p>However, the universe of covered decisions is narrower: SB 26-189 limits &ldquo;consequential decisions&rdquo; to seven &ldquo;covered domains&rdquo; (education, employment, residential real estate, financial or lending services, insurance, healthcare, and essential government services), dropping legal services, which SB 24-205 included.[[N:<em>Compare</em> S.B. 24-205 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1701(3)) (repealed 2026) <em>with</em> S.B. 26-189 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1701(6)).]]</p> <p>Additionally, SB 26-189 exempts ADMT used for low-stakes or routine decisions, advertising and marketing, spreadsheets that require human analysis, procedural tasks, cybersecurity and privacy tasks, administration, fraud prevention, and others.[[N:S.B. 26-189 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1701(2)(b)).]] These use exemptions are similar to those in California&rsquo;s 2025 ADMT regulations.[[N:See Cal. Code Regs. tit. 11, art. 1 &sect; 7001(e)(3) (2025) (exempting from the definition of ADMT &ldquo;web hosting, domain registration, networking, caching, website-loading, data storage, firewalls, anti-virus, anti-malware, spam- and robocall-filtering, spellchecking, calculators, databases, and spreadsheets, provided that they do not replace human decisionmaking&rdquo;).]] Still, absent further developments, any company using ADMT in hiring and employment decisions, regardless of industry or service, should consider its plan for compliance with the new law.</p> <p><strong>Algorithmic Discrimination</strong>: Rather than imposing a duty to avoid &ldquo;algorithmic discrimination,&rdquo; SB 26-189 instead provides that existing state discrimination laws, such as the Colorado Anti-Discrimination Act, apply to regulated uses of ADMT.[[N:<em>Compare</em> S.B. 24-205 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1702) (repealed 2026) <em>with</em> S.B. 26-189 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1707(1)).]] Deployers are no longer required to implement a detailed risk management policy or complete a lengthy impact assessment.</p> <p><strong>Developer Obligations</strong>: AI developers must provide deployers with (1) the intended and harmful or inappropriate uses of the technology; (2) a description of the categories of data used to train the technology; (3) limitations, risks and circumstances in which deployers should not use the technology; (4) instructions for appropriate use and information necessary for deployers to comply with the law; and (5) notice of updates and modifications.[[N:S.B. 26-189 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1702(1), (2)(a)).]] This is less extensive than SB 24-205, which additionally required developers to furnish deployers with documentation of known or foreseeable risks of algorithmic discrimination and a summary of the data governance measures used in developing the system.[[N:S.B. 24-205 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1702(2)(b)(II), (c)(II)) (repealed 2026).]]</p> <p><strong>Deployer Obligations</strong>: Requirements for companies that deploy ADMT focus on anticipating and responding to adverse outcomes that consumers may experience as a result of ADMT decisions.[[N:S.B. 26-189 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1704(3)).]] Deployers must give consumers notice before using ADMT for consequential decisions.[[N:Id. &sect; 6-1-1704(1).]] If a consumer experiences an adverse outcome from a decision in which ADMT played a role, the deployer must disclose the consumer&rsquo;s right to request personal data, correct inaccurate data, and obtain human review of the decision.[[N:Id. &sect; 6-1-1704(3).]] SB 24-205&rsquo;s deployer obligations were considerably more involved: deployers had to complete a pre-deployment impact assessment, adopt and maintain a written risk management policy, and, in some cases, complete annual reviews of the system&rsquo;s performance.[[N:See generally S.B. 24-205 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1703).]] SB 26-189 eliminates all three requirements, imposing on deployers a more limited, disclosure-driven compliance program built around notice and post-outcome transparency rather than ongoing risk management.</p> <p><strong>Consumer Rights</strong>: A consumer who experiences an adverse outcome as a result of an ADMT-driven consequential decision has the right to request personal data, correct inaccurate data, and obtain human review and reconsideration of the decision.[[N:S.B. 26-189 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1705(1)(a)(I)-(II)).]] SB 24-205 similarly required deployers to provide consumers an opportunity to correct personal data;[[N:S.B. 24-205 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1703(4)(b)(II)) (repealed 2026).]] however, SB 24-205 was broader when it came to consumer access to their personal data. Beyond simply being granted the ability to request &ldquo;instructions for requesting personal data,&rdquo;[[N:S.B. 26-189 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1705(1)(a)(I)).]] SB 24-205 required deployers to automatically &ldquo;provide to the consumer &hellip; [t]he type of data that was processed.&rdquo;[[N:S.B. 24-205 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1703(4)(b)(I)(B)) (repealed 2026).]] These consumer rights are similar to those that California created, but California goes further, requiring businesses to give consumers the ability to opt out of ADMT.[[N:Cal. Code Regs. tit. 11, &sect; 7221 (2025).]]</p> <p><strong>Liability</strong>: SB 26-189 imposes liability on developers or deployers for unlawful discrimination under Colorado&rsquo;s Anti-Discrimination Act for regulated uses of covered ADMT.[[N:S.B. 26-189 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect;&sect; 6-1-1707(1)).]] However, developers cannot be held liable for a deployer&rsquo;s <em>unintended</em> use of the ADMT that results in a discriminatory decision.[[N:Id. &sect; 6-1-1707(5)(b).]] The statute also allocates fault between developers and deployers based on their relative responsibility for a violation, rather than imposing automatic joint liability, and voids any contract provision that purports to indemnify a party against liability for its own discriminatory use of ADMT.[[N:Id. &sect; 6-1-1707(2), (4), (7)(a).]]</p> <p><strong>Litigation and Enforcement</strong>: The law does not create a private right of action. Instead, it provides for enforcement by the Attorney General under the Colorado Consumer Protection Act.[[N:S.B. 26-189 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect;&sect; 6-1-1706, 6-1-1709).]] On this point, SB 26-189 preserves SB 24-205&rsquo;s approach: both[[N:S.B. 24-205 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1706) (repealed 2026).]] versions of the law leave enforcement exclusively to the Attorney General.</p> <p>The law provides for a notice-and-cure period of 60 days, but if a deployer or developer knowingly or repeatedly violates the provisions, the Attorney General is not required to provide notice or time for cure.[[N:S.B. 26-189 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect;&sect; 6-1-1706(3)(b), (c)).]]</p> <p>The months leading up to the law taking effect on January 1, 2027 will be instructive. The Attorney General is expected to adopt rules clarifying the requirements and issue guidance about how the law will apply to different sectors and domains.[[N:Id. &sect; 6-1-1706(5).]] Deployers will need to monitor the rulemaking to understand their compliance obligations.</p> <h2>How Has the FTC Responded to SB 26-189?</h2> <p>In early July, just over one month after the Revised Act&rsquo;s passage, the FTC issued a Proposed Policy Statement Concerning the Suppression of Accuracy in Artificial Intelligence Systems.[[N:FTC, <a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/ai-policy-statement_0.pdf" target="_blank">Federal Trade Commission&rsquo;s Proposed Policy Statement Concerning The Suppression Of Accuracy In Artificial Intelligence Systems</a> (July 1, 2026).]] The Proposed Policy Statement warns against a &ldquo;balkanized or patchwork regulatory approach&rdquo; and cites Colorado&rsquo;s original AI statute as an example of state regulators &ldquo;requiring American companies to embed ideological bias within their AI models.&rdquo;[[N:Id.]] While the Proposed Policy Statement acknowledges the changes made in SB 26-189, it states that even &ldquo;the new version poses many of the same concerns&rdquo; as Colorado&rsquo;s original act and may be preempted by Section 5 of the FTC Act.[[N:Id.]] The Proposed Policy Statement cites SB 26-189&rsquo;s liability provisions as applying &ldquo;pressure&rdquo; on AI developers to &ldquo;alter&rdquo; model outputs in ways that may themselves violate Section 5.[[N:Id.]]</p> <p>The FTC is currently seeking comment on the Proposed Policy Statement until July 31, 2026.[[N:FTC, <a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/07/ftc-seeks-public-comment-policy-statement-addressing-ai-accuracy" target="_blank">FTC Seeks Public Comment on Policy Statement Addressing AI Accuracy</a> (July 1, 2026).]]</p> <h2>Practical Guidance for Navigating These AI Laws</h2> <p>It will be crucial that companies adopt compliance measures as soon as possible in the covered areas. This is especially important because the 60-day notice-and-cure provision will not apply to developers or deployers who knowingly violate the law or ignore potential violations. Violators risk incurring penalties of up to $20,000 per violation.[[N:S.B. 26-189 &sect; 1 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1706(3)(c)); see S.B. 26-189 &sect; 2 (<em>to be codified at</em> Colo. Rev. Stat. &sect; 6-1-1705(1)(uuuu)) (deeming violation of the Colorado AI Act an unfair or deceptive trade practice); Colo. Rev. Stat. &sect; 6-1-112(1)(a) (providing that violations will result in fines of up to $20,000).]]</p> <p><strong>Below are a few compliance obligations that businesses should focus on in the near term.</strong></p> <p>Compliance obligations for deployers:</p> <ul> <li><strong>Deployers should prepare for compliance with the new consumer rights provisions</strong>. Deployers (that is, all businesses using ADMT to provide services in any of the covered domains, as well as any business using ADMT in employment decisions regardless of industry) bear the onus of complying with SB 26-189&rsquo;s new consumer rights provisions. When a consumer experiences an adverse outcome from an ADMT-driven decision, deployers must have in place processes for handling consumer data access and correction requests.</li> <li><strong>Deployers should start with an ADMT inventory and prioritize employment</strong>. Before drafting any disclosures, deployers should map every system that touches a covered domain (not just AI marketed as &ldquo;AI&rdquo;) since SB 26-189&rsquo;s technology-neutral definition can sweep in conventional scoring tools and rules-based systems that a narrower, AI-specific definition might have missed. Employment decisions deserve particular attention regardless of industry: it is the one domain where Colorado and Connecticut (among other states) overlap.</li> <li><strong>Deployers should build the required notice, disclosure, and human-review workflows</strong>. Because SB 26-189 dropped the risk-assessment and audit obligations of Colorado&rsquo;s original AI law in favor of a disclosure-driven model, the practical work ahead should focus on operational infrastructure: notices to consumers before using ADMT and templates for disclosing adverse-outcome rights. Companies with existing state privacy compliance programs may be able to adapt those frameworks to address some of these requirements, though the human-review requirement and adverse-outcome disclosure triggers are new. Businesses should also identify candidates who will serve as human reviewers of adverse decisions.</li> </ul> <p>Compliance obligations for developers:</p> <ul> <li><strong>Developers should document intended use, and be prepared to explain any changes to model outputs</strong>. Because SB 26-189 shields developers from liability for a deployer&rsquo;s unintended or out-of-scope use of their technology, a developer&rsquo;s own documentation of intended and inappropriate uses will be critical in avoiding liability for unintended uses. Given the FTC&rsquo;s stated concern that developers may be tempted to quietly alter model outputs to avoid liability under laws like SB 26-189, developers should also be able to show that any changes to a model&rsquo;s outputs were made for disclosed, legitimate reasons, rather than as an undisclosed attempt to route around Colorado&rsquo;s law in a way that could itself raise Section 5 exposure.</li> </ul> <p>Compliance obligations for both deployers and developers:</p> <ul> <li><strong>Deployers and developers alike should track the Attorney General&rsquo;s rulemaking</strong>. Much of SB 26-189&rsquo;s practical scope (what counts as &ldquo;materially influencing&rdquo; a decision, what a compliant adverse-outcome disclosure looks like, etc.) is expected to be filled in by rulemaking before the January 1, 2027 effective date. Because the rulemaking will fill in key details, deployers with significant Colorado exposure may benefit from participating in the comment process.</li> </ul> <p>Ultimately, the FTC&rsquo;s position that SB 26-189 may be preempted by federal law puts Colorado&rsquo;s AI statute in a state of uncertainty and leaves developers to navigate how to satisfy SB 26-189&rsquo;s disclosure and liability provisions without running afoul of Section 5. Until that tension resolves (whether through the FTC&rsquo;s final policy statement, litigation, or further legislative action), developers and deployers servicing Colorado consumers can still expect to be subject to SB 26-189&rsquo;s requirements starting on January 1, 2027.</p> <p>* Maria Duque contributed to this Advisory. Maria is a summer associate in Arnold &amp; Porter&rsquo;s Chicago office.</p> </span></p> </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{011A9614-2EA5-45B7-9C9C-985BA95173DB}https://www.arnoldporter.com/en/perspectives/events/2026/07/taking-buy-local-to-the-next-level-supply-chain-developments-in-life-sciencesLynn Fischer Foxhttps://www.arnoldporter.com/en/people/f/fischer-fox-lynnlynn.fischerfox@arnoldporter.comKristen E. Ittighttps://www.arnoldporter.com/en/people/i/ittig-kristen-ekristen.ittig@arnoldporter.comAlexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comHoward Sklamberghttps://www.arnoldporter.com/en/people/s/sklamberg-howardhoward.sklamberg@arnoldporter.comElizabeth Trentacosthttps://www.arnoldporter.com/en/people/t/trentacost-elizabethelizabeth.trentacost@arnoldporter.comTraditional government contractors have long known that the integrity of the supply chain for the U.S. industrial base is a crucial national security issue.Wed, 22 Jul 2026 00:00:00 -0500<p>Traditional government contractors have long known that the integrity of the supply chain for the U.S. industrial base is a crucial national security issue. As this program will explore, accelerating efforts to strengthen and onshore pharmaceutical supply chains have become a critical part of the Administration&rsquo;s push for economic sovereignty and highlight the importance of this issue in the life sciences space. The effort to build the domestic supply chain could have unexpected consequences for allied countries.</p> <p>Recent trade, regulatory, and industrial policy developments all point to an increased focus on the expansion of domestic manufacturing capacity. While the Acetris decision somewhat loosened Trade Agreements Act requirements, recent procurement trends indicate heightened interest in disclosure of the origin on ingredients, perhaps leading to increased demand for U.S.-origin components and end products. This marries up with the Administration&rsquo;s Section 232 investigations, which are examining the effects on national security of pharmaceuticals and their ingredients. Related tariff proposals and most-favored-nation (MFN) deals for patented pharmaceuticals and active pharmaceutical ingredients (APIs) have heightened focus on supply chain resiliency and domestic production. At the same time, exemptions for generic drugs, biosimilars, and certain 505(b)(2) products&mdash;and a planned reassessment by the Department of Commerce&mdash;raise important questions about the future of pharmaceutical manufacturing policy. Meanwhile, negotiations surrounding the reauthorization of the Generic Drug User Fee Amendments (GDUFA IV) and Prescription Drug User Fee Act (PDUFA VIII) may introduce new incentives and considerations relating to manufacturing location, supply chain security, and clinical development.</p> <p>Arnold &amp; Porter will discuss key developments shaping pharmaceutical supply chains and onshoring strategies, including U.S. and EU efforts to bolster production of essential medicines, the intersection of trade and regulatory policy, and the potential implications of user fee reauthorization negotiations for manufacturers, product developers, and other supply chain stakeholders.</p> <h2>Speakers</h2> <ul> <li>Lynn Fischer Fox | Partner and former Deputy Assistant Secretary with the Department of Commerce</li> <li>Kristen Ittig | Partner, Government Contracts and National Security</li> <li>Alexander Roussanov | Partner and former Legal Advisor at EMA</li> <li>Howard Sklamberg | Partner and former Deputy Commissioner for Global Regulatory at FDA</li> <li>Elizabeth Trentacost | Senior Associate and former Regulatory Counsel at FDA</li> </ul> <p>We invite you to join us and to come with questions! </p> <h4><strong>Save the Date</strong></h4> <strong>Part IV: Complying with Export Controls and Trade Sanctions</strong><br /> Wednesday, October 21<br /> 11 a.m.-noon ET<br /> <br /> <strong>Speakers</strong>: John Barker, Eun Young Choi, and Alexander Italianer<br /> <br />{FA7D6E2F-4D7C-437E-B180-09BE00BDDD1D}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/eva-temkin-discusses-fdas-complete-response-letter-transparency-policy-in-biospaceEva Temkin, Arnold &amp; Porter Life Sciences &amp; Healthcare Regulatory partner and former Acting Policy Staff Director at the U.S. Food and Drug Administration (FDA)'s Office of Therapeutic Biologics and Biosimilars, was quoted in the <em>BioSpace </em>article, "FDA's radical transparency policy for rejections runs into legal uncertainty," which examines the legal and regulatory questions surrounding the FDA's policy of publishing complete response letters (CRLs) for unapproved drug applications.Wed, 22 Jul 2026 00:00:00 -0500<p>Eva Temkin, Arnold &amp; Porter Life Sciences &amp; Healthcare Regulatory partner and former Acting Policy Staff Director at the U.S. Food and Drug Administration (FDA)'s Office of Therapeutic Biologics and Biosimilars, was quoted in the <em>BioSpace</em> article, "FDA's radical transparency policy for rejections runs into legal uncertainty," which examines the legal and regulatory questions surrounding the FDA's policy of publishing complete response letters (CRLs) for unapproved drug applications.&nbsp;</p> <p>Addressing the FDA's current approach, Eva cautioned that the agency's policy shift raises complex legal and regulatory issues that have not been adequately vetted through the public rulemaking process. "I'm not sure the new policy is right," she said, explaining that the change "was premised on a very narrow view of the way this policy would impact drug development and, hence, patient access."</p> <p>Eva also welcomed the FDA's decision to pursue formal rulemaking, noting that stakeholders should have the opportunity to provide meaningful input before the policy moves forward. While observing that "it's likely too late to put the proverbial toothpaste back in the tube," she urged the agency to pause implementation of the CRL publication policy until it "receives feedback, considers that feedback and finalizes the rule accordingly."</p> <p><a href="https://www.biospace.com/fda/fdas-radical-transparency-policy-for-rejections-runs-into-legal-uncertainty">Read the full article.</a></p>{50AD5C6A-A060-40B6-8E74-6A819DD1E3CB}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/howard-sklamberg-discusses-fda-oversight-of-peptides-on-nprHoward Sklamberg, Arnold &amp; Porter Life Sciences &amp; Healthcare Regulatory partner and former Deputy Commissioner for Global Regulatory Operations and Policy at the U.S. Food and Drug Administration (FDA), recently spoke with <em>NPR&rsquo;s Short Wave</em> to discuss the regulatory challenges surrounding the expanding market for peptide products.Wed, 22 Jul 2026 00:00:00 -0500<p>Howard Sklamberg, Arnold &amp; Porter Life Sciences &amp; Healthcare Regulatory partner and former Deputy Commissioner for Global Regulatory Operations and Policy at the U.S. Food and Drug Administration (FDA), recently spoke with <em>NPR&rsquo;s Short Wave</em> to discuss the regulatory challenges surrounding the expanding market for peptide products.</p> <p>The hosts explained that while peptides hold scientific promise, many products marketed for anti-aging, recovery, and performance enhancement have not undergone the rigorous clinical testing required for FDA approval.</p> <p>Howard cautioned that the broad availability of compounded and unapproved peptides could discourage investment in the clinical trials needed to develop approved therapies, while also posing a public health threat. &ldquo;The FDA is always pulled between a public health impulse and a more libertarian impulse,&rdquo; he said, noting that the FDA's regulatory framework is intended to protect patients while ensuring innovation is supported by reliable scientific evidence.</p> <p><a href="https://podcasts.apple.com/us/podcast/does-the-science-of-peptides-live-up-to-the-hype/id1482575855?i=1000777798327">Listen to the full interview.</a></p>{A3F54E5F-D079-46A3-9719-CE4D2EA06887}https://www.biosliceblog.com/2026/07/edpb-guidelines-on-anonymisation-what-life-sciences-companies-need-to-know/Alexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comJami Vibberthttps://www.arnoldporter.com/en/people/v/vibbert-jamijami.vibbert@arnoldporter.comCamille Vermosenhttps://www.arnoldporter.com/en/people/v/vermosen-camillecamille.vermosen@arnoldporter.comTue, 21 Jul 2026 00:00:00 -0500{702409AF-6F47-44D2-95A3-3C11ADBBDA67}https://www.arnoldporter.com/en/perspectives/news/2026/07/arnold-porter-shortlisted-for-14-awards-at-2026-lmg-life-sciences-americas-awardsArnold &amp; Porter has been shortlisted for 14 awards at the 2026 <em>LMG Life Sciences Americas</em> Awards, which recognize the region&rsquo;s most distinguished practitioners and their firms for their exemplary work in the Life Sciences legal practice over the past year.&nbsp;Mon, 20 Jul 2026 00:00:00 -0500<p>Arnold &amp; Porter has been shortlisted for 14 awards at the <a rel="noopener noreferrer" href="https://www.managingip.com/article/2gmrqoytrqemj2zwv1ukg/managing-ip-awards/life-sciences-awards-americas-2026-shortlist-revealed" target="_blank">2026 <em>LMG Life Sciences Americas </em>Awards</a>, which recognize the region&rsquo;s most distinguished practitioners and their firms for their exemplary work in the Life Sciences legal practice over the past year. Following extensive research and submission evaluations, the annual ceremony will recognize significant cases and deals, along with the legal professionals and firms involved.</p> <p>Arnold &amp; Porter has been shortlisted in the following &ldquo;Firm of the Year&rdquo; categories:</p> <ul> <li>Antitrust Firm of the Year</li> <li>FDA Litigation &amp; Enforcement Firm of the Year</li> <li>Government Investigations Firm of the Year</li> <li>Healthcare Pricing &amp; Reimbursement Firm of the Year</li> <li>Licensing &amp; Collaboration Firm of the Year</li> <li>Life Cycle Firm of the Year</li> <li>Product Liability Firm of the Year</li> <li>Regulatory Firm of the Year</li> </ul> <p>The following Arnold &amp; Porter lawyers have been shortlisted for awards in their respective practices:</p> <ul> <li>Mahnu Davar &mdash; Healthcare Advocacy Attorney of the Year</li> <li>Jeffrey Handwerker &mdash; Regulatory Attorney of the Year: Pricing &amp; Reimbursement</li> <li>Jennifer Oh &mdash; U.S. Rising Star</li> <li>Michael Rogoff &mdash; Government Investigations Attorney of the Year</li> <li>Eva Temkin &mdash; FDA Litigation &amp; Enforcement Attorney of the Year; Woman Practitioner of the Year</li> </ul> <p>The winners will be announced at the <em>LMG Life Sciences Americas</em> Awards ceremony in New York City on September 10, 2026.</p>{2C110C35-EC7A-475E-8254-6EC1E28F279C}https://clsbluesky.law.columbia.edu/2026/07/20/arnold-porter-discusses-proposed-fdic-overhaul-of-confidential-information-regulations/Robert C. Azarowhttps://www.arnoldporter.com/en/people/a/azarow-robert-crobert.azarow@arnoldporter.comDavid F. Freeman, Jr.https://www.arnoldporter.com/en/people/f/freeman-david-fDavid.Freeman@arnoldporter.comAmber A. Hayhttps://www.arnoldporter.com/en/people/h/hay-amber-aamber.hay@arnoldporter.comAnthony Raglanihttps://www.arnoldporter.com/en/people/r/raglani-anthonyanthony.raglani@arnoldporter.comKevin M. Toomeyhttps://www.arnoldporter.com/en/people/t/toomey-kevin-mkevin.toomey@arnoldporter.comChristopher L. Allenhttps://www.arnoldporter.com/en/people/a/allen-christopher-lChristopher.Allen@arnoldporter.comMon, 20 Jul 2026 00:00:00 -0500{0480B2F7-4D3D-4610-98DF-1B631328D139}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/maria-chedid-comments-in-law360-on-ai-trends-in-arbitrationMaria Chedid, global chair of Arnold &amp; Porter&rsquo;s International Arbitration practice, was quoted in the <em>Law360</em> article, "3 Int'l Arbitration Trends To Watch: Midyear Report," examining key developments expected to shape arbitration through the remainder of 2026.Thu, 16 Jul 2026 00:00:00 -0500<p>Maria Chedid, global chair of Arnold &amp; Porter&rsquo;s International Arbitration practice, was quoted in the <em>Law360</em> article, "3 Int'l Arbitration Trends To Watch: Midyear Report," examining key developments expected to shape arbitration through the remainder of 2026.</p> <p>Drawing on her extensive research into challenges to arbitral awards across all U.S. federal courts, Maria noted a material increase in claims alleging arbitrator misconduct over the past five years.&nbsp;</p> <p>Looking ahead, Maria explained that as arbitrators increasingly adopt artificial intelligence, parties are likely to raise new challenges to awards based on its use. "There's a lot of conversation in the arbitration community about how we can better use AI to improve efficiency of arbitration," she said. "As arbitrators now are increasingly using AI to facilitate their side of the dispute resolution process, I expect it will give rise to a variety of different challenges against them once the awards are issued."</p> <p>Maria also pointed to a recent Canadian court decision vacating an arbitral award after an arbitrator relied on AI-generated, fabricated legal citations. While calling it "an extreme case," she said it "does provide a preview of how parties might...attempt to argue that they were deprived of a fair opportunity to present their case due to an arbitrator's delegation to AI," underscoring the evolving legal questions surrounding AI's role in arbitration.</p> <p><a href="https://www.law360.com/articles/2501130/3-int-l-arbitration-trends-to-watch-midyear-report">Read the full article</a> (subscription required).</p>{757070C8-6C05-4D67-9151-C18620BC6E21}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/law360-quotes-john-elwood-on-the-us-supreme-courts-2025-2026-term<span>John Elwood, head of Arnold &amp; Porter&rsquo;s Appellate &amp; Supreme Court practice, was quoted in the <em>Law360</em> article, "Circuit-By-Circuit Guide To The US Supreme Court's Term," analyzing how the federal courts of appeals fared during the U.S. Supreme Court's recently concluded term.</span><br />Thu, 16 Jul 2026 00:00:00 -0500<p>John Elwood, head of Arnold &amp; Porter&rsquo;s Appellate &amp; Supreme Court practice, was quoted in the <em>Law360</em> article, "Circuit-By-Circuit Guide To The US Supreme Court's Term," analyzing how the federal courts of appeals fared during the U.S. Supreme Court's recently concluded term.</p> <p>Commenting on the Court's review of decisions from the U.S. Court of Appeals for the D.C. Circuit, John observed that the appellate court appropriately applied then-existing Supreme Court precedent in Trump v. Slaughter, which involved the President's authority to remove Federal Trade Commission commissioners. "Humphrey's Executor involved that very agency, the FTC, so they did what they were supposed to do, and the Supreme Court changed the law," he said. "So [you] can't fault them for that reversal."</p> <p>John also discussed the Supreme Court's decision involving the Federal Communications Commission's penalty authority, explaining that although the Court reversed the Fifth Circuit, the outcome reflected significant concessions made by the U.S. solicitor general during the litigation. "The way that the solicitor general was able to eke out a win in the Supreme Court was by basically saying that the FCC's action didn't mean anything," John said.</p> <p><a href="https://www.law360.com/articles/2498688/circuit-by-circuit-guide-to-the-us-supreme-court-s-term">Read the full article</a> (subscription required).</p>{87F2844B-49FB-47AB-AEC7-70ABB1CD0833}https://www.arnoldporter.com/en/perspectives/news/2026/07/latinvex-again-ranks-arnold-porter-among-top-international-law-firms-in-latin-americaArnold &amp; Porter has again been recognized in<em> Latinvex&rsquo;s</em> &ldquo;Latin America: Top International Law Firms&rdquo; list in four categories.Thu, 16 Jul 2026 00:00:00 -0500<p>Arnold &amp; Porter has again been recognized in <em>Latinvex</em>&rsquo;s &ldquo;Latin America: Top International Law Firms&rdquo; list in four categories. The 2026 list, based on &ldquo;a combination of factors, including value, prominence, and scope of work and references among clients and peers,&rdquo; reflects the firm&rsquo;s sustained achievement in the region.</p> <p>The firm received rankings in the following categories:</p> <ul> <li>Arbitration</li> <li>Capital Markets</li> <li>FCPA &amp; Fraud</li> <li>Mining</li> </ul> <p>Arnold &amp; Porter has advised clients across Latin America for more than 40 years, combining deep regional knowledge with market-leading capabilities in cross-border disputes, complex corporate and finance transactions, and high-stakes regulatory matters. The firm&rsquo;s multidisciplinary team includes many native and fluent Spanish and Portuguese speakers, as well as lawyers trained in both Latin American civil law and U.S. common law, enabling it to provide practical, strategic counsel that reflects the region&rsquo;s legal, business, and cultural landscape.</p>{519C6EA3-2CD2-488C-A1B5-6A4264F345ED}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/ftc-and-doj-settlement-for-hsr-act-violationsMatthew Tabashttps://www.arnoldporter.com/en/people/t/tabas-matthewmatthew.tabas@arnoldporter.comPeter G. Daniashttps://www.arnoldporter.com/en/people/d/danias-peterpeter.danias@arnoldporter.comRyan Z. Wattshttps://www.arnoldporter.com/en/people/w/watts-ryan-zryan.watts@arnoldporter.comSummer Perezhttps://www.arnoldporter.com/en/people/p/perez-summersummer.perez@arnoldporter.comOn July 13, 2026, the U.S. Department of Justice (DOJ), on behalf of the Federal Trade Commission (FTC), announced a proposed settlement with Edwards Lifesciences and Genesis MedTech over allegations that the companies deliberately structured Edwards' acquisition of JC Medical to evade the Hart-Scott-Rodino (HSR) Act's premerger notification requirements. The settlement imposes a record $12 million in combined civil penalties and underscores the agencies' willingness to scrutinize transactions involving pre-commercial medical technologies, particularly where related deal components may have been divided to avoid HSR filing thresholds. The case, coupled with the FTC's successful challenge to Edwards' proposed acquisition of JenaValve, reinforces that antitrust regulators will look beyond a transaction's formal structure to its economic substance and highlights the importance of involving antitrust counsel early when structuring complex acquisitions.Thu, 16 Jul 2026 00:00:00 -0500<p> <p>On July 13, 2026, the U.S. Department of Justice (DOJ), acting on behalf of the Federal Trade Commission (FTC), filed a complaint and proposed final judgment in the United States District Court for the District of Columbia against Edwards Lifesciences Corporation (Edwards) and Genesis MedTech Group Limited (Genesis), alleging that the parties structured Edwards&rsquo; acquisition of JC Medical, Inc. (JC Medical) to avoid complying with the notification and waiting period requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (HSR Act). Under the terms of the proposed settlement, Edwards will pay a $10 million civil penalty and Genesis will pay a $2 million civil penalty &mdash; which together constitute the largest civil penalty the agencies have obtained for a failure to file under the HSR Act. The settlement follows the FTC&rsquo;s successful challenge, discussed in our <a href="https://www.arnoldporter.com/en/perspectives/advisories/2026/02/ftc-antitrust-enforcement-development-pipeline-deals" target="_self">February 2026 Advisory</a>, to Edwards&rsquo; proposed acquisition of JenaValve Technology, Inc. (JenaValve), which the district court enjoined in January 2026. </p> <p>Together, the two matters illustrate the agencies&rsquo; continued focus on acquisitions of pre-commercial pipeline medical technology and strict enforcement of the HSR Act&rsquo;s reporting requirements. Notably, this settlement is also one of the rare instances in which the agencies have imposed civil penalties on both the buyer and the seller, reflecting their conclusion that both Edwards and Genesis were culpable in structuring the deal to avoid HSR review. The FTC contended that Genesis&rsquo; own failure to file constituted a violation of the HSR Act.[[N:Compl. &para; 41, <em>United States v. Edwards Lifesciences Corp.</em>, No. 1:26-cv-02450, Dkt. 1 (D.D.C. July 13, 2026) (&ldquo;Section 7A(g)(1) of the Clayton Act, 15 U.S.C. &sect; 18a(g)(1), provides that any person, or any officer, director, or partner thereof, who fails to comply with any provision of the HSR Act is liable to the United States for a civil penalty for each day during which such person is in violation.&rdquo;).]]</p> <h2>Background of the Transaction</h2> <p>According to the complaint, on July 22, 2024, Edwards, a global cardiac device manufacturer, agreed to acquire JC Medical from Genesis for $115 million, plus milestone payments with an ostensible value of approximately $1.8 million.[[N:Id. &para; 1.]] JC Medical was, at the time, engaged in U.S. clinical trials for a transcatheter aortic valve replacement device to treat aortic regurgitation (a TAVR-AR device). Edwards closed the JC Medical acquisition the same day it was signed, without submitting a filing under the HSR Act and without observing the Act&rsquo;s statutory waiting period.[[N:Id. &para;&para; 1, 23.]] The parties did not publicly announce the transaction at that time.</p> <p>Contemporaneously with the JC Medical acquisition, Edwards agreed to invest $25 million in non-voting securities of Genesis itself.[[N:Id. &para;&para; 5, 24.]] The complaint alleges that Edwards and Genesis viewed the JC Medical purchase price and the Genesis investment as part of a single, integrated deal &mdash; negotiated together and documented in term sheets transmitted in a single email &mdash; but treated them as legally separate transactions for HSR purposes so that neither, viewed in isolation, would meet the HSR Act&rsquo;s then-applicable $119.5 million reporting threshold.[[N:Id. &para;&para; 3-5, 27-31.]] Had the two payments been aggregated, the complaint alleges, the transaction value would have exceeded the &ldquo;size of transaction&rdquo; threshold and triggered a mandatory HSR filing and waiting period.[[N:Id. &para;&para; 5, 34-35.]]</p> <p>The very next day, July 23, 2024, Edwards agreed to acquire JenaValve &mdash; JC Medical&rsquo;s only competitor in the development of TAVR-AR devices &mdash; for $945 million.[[N:Id. &para; 1; see also Mem. Op. at 21, <em>FTC v. Edwards Lifesciences Corp.</em>, No. 1:25-cv-02569-RC, Dkt. 178 (D.D.C. Jan. 9, 2026).]] The complaint alleges that, in acquiring both companies, Edwards sought to own &ldquo;the only two companies in the United States with TAVR-AR devices in clinical trials.&rdquo;[[N:Compl. &para; 1 (quoting Mem. Op. at 1).]] Notably, JenaValve was not aware, at the time it agreed to be acquired, that Edwards had already acquired JC Medical.[[N:Mem. Op. at 22.]] </p> <p>As discussed in our <a href="https://www.arnoldporter.com/en/perspectives/advisories/2026/02/ftc-antitrust-enforcement-development-pipeline-deals" target="_self">February 2026 Advisory</a>, the FTC separately challenged Edwards&rsquo; proposed acquisition of JenaValve under Section 7 of the Clayton Act, and on January 9, 2026, Judge Rudolph Contreras of the U.S. District Court for the District of Columbia granted the FTC&rsquo;s request for a preliminary injunction blocking that deal.[[N:Id. at 107.]] The parties abandoned the transaction shortly thereafter.</p> <h2>HSR Filing Requirements and the Prohibition on Structuring to Avoid Review</h2> <p>The HSR Act requires parties to an acquisition of voting securities or assets that exceeds certain dollar thresholds &mdash; $119.5 million at the time of the JC Medical transaction &mdash; to file premerger notification with the FTC and DOJ and to observe a statutory waiting period before closing.[[N:15 U.S.C. &sect; 18a(a); Compl. &para; 15.]] The purpose of the notification and waiting period is to give the antitrust agencies an opportunity to review a transaction, and, where warranted, to seek an injunction, before the parties consummate an anticompetitive acquisition.</p> <p>The HSR Rules contain an explicit anti-avoidance provision, 16 C.F.R. &sect; 801.90, which provides that any transaction or device entered into for the purpose of avoiding the Act&rsquo;s filing obligations &ldquo;shall be disregarded,&rdquo; and that reportability is instead determined by applying the HSR Act to the substance of the transaction.[[N:16 C.F.R. &sect; 801.90.]] Relatedly, where the acquisition price for voting securities has been determined, that price generally sets the transaction value for HSR purposes, and the value must reflect the full consideration paid for the securities, regardless of the form in which that consideration is delivered.[[N:16 C.F.R. &sect; 801.10(a)(2), (c)(2)-(3).]]</p> <p>Applying these principles, the complaint alleges that the $25 million Genesis investment was, in substance, additional consideration for JC Medical rather than an independent transaction, and that Edwards&rsquo; own communications acknowledged the JC Medical deal was structured to stay &ldquo;below the threshold&rdquo; intentionally.[[N:Compl. &para;&para; 27, 32-35.]] Because the aggregated consideration exceeded $119.5 million, the government alleges the transaction was reportable under the HSR Act notwithstanding its bifurcated form.</p> <h2>Key Terms of the Settlement</h2> <p>The Commission voted 2-0 to accept the proposed settlement and refer the matter to DOJ, which filed the complaint and proposed final judgment on the FTC&rsquo;s behalf on July 13, 2026. Key terms of the proposed final judgment,[[N:Proposed Final Judgment, <em>United States v. Edwards Lifesciences Corp.</em>, No. 1:26-cv-02450, Dkt. 1-3 (D.D.C. July 13, 2026).]] which is subject to review by the court, include:</p> <ul> <li><em>Civil penalties</em>. Edwards will pay a $10 million civil penalty and Genesis will pay a $2 million civil penalty &mdash; together described by the FTC as the largest combined penalty ever obtained for an HSR filing failure.</li> <li><em>Prior notification requirement</em>. For five years, Edwards must provide 30 days&rsquo; advance written notification to the FTC &mdash; on the standard HSR Notification and Report Form, but without a filing fee and without notice to DOJ &mdash; before acquiring any ownership interest in a firm that (i) commercially sells a TAVR-AR device in the United States, (ii) is engaged in U.S. clinical trials for a TAVR-AR device, or (iii) holds an FDA Investigational Device Exemption to conduct such trials. If the FTC requests additional information during the 30-day period, Edwards must wait a further 30 days after responding before closing.</li> <li><em>Antitrust compliance program</em>. Edwards must designate an antitrust compliance officer, distribute the final judgment, and provide training to relevant officers, directors, and employees with responsibility over business development, strategic planning, or M&amp;A, and obtain periodic written certifications of compliance.</li> <li><em>Compliance inspection and enforcement</em>. The judgment gives DOJ and the FTC ongoing rights to inspect records and interview personnel, and preserves the government&rsquo;s right to seek contempt remedies, an extension of the judgment, and recovery of its enforcement costs for violations occurring even after the judgment&rsquo;s term.</li> <li><em>No admission of liability</em>. Entry of the final judgment does not constitute an admission or finding of wrongdoing, and Edwards and Genesis deny any violation of law.</li> </ul> <h2>Practical Takeaways</h2> <p>The Edwards/JC Medical settlement, read together with the JenaValve injunction, offers several lessons for parties structuring acquisitions &mdash; particularly in life sciences and other innovation-intensive industries where competitively significant assets may still be in development:</p> <ul> <li><em>Substance governs over form</em>. Parties cannot avoid the HSR Act&rsquo;s notification and waiting period requirements by dividing a single economic transaction into formally separate pieces &mdash; here, an acquisition price and a contemporaneous investment &mdash; each priced to fall below the reporting threshold. Where related transactions are negotiated together, documented together, and intended to compensate for the same asset, there is a risk that the agencies will assert they should be aggregated.</li> <li><em>Engage antitrust counsel early to evaluate aggregation risk</em>. Whenever a transaction includes minority investments, licensing arrangements, earnouts, or other consideration flowing between the same or related parties at or near the same time as a primary acquisition, clients should consult antitrust counsel before signing to assess whether those arrangements should be aggregated with the primary transaction for HSR valuation purposes &mdash; and, if so, whether the combined transaction is reportable. This analysis is fact-intensive and turns on the parties&rsquo; contemporaneous documents and communications, which the agencies will scrutinize closely after the fact.</li> <li><em>Structuring to avoid review compounds risk rather than reduces it</em>. Avoiding HSR review for the JC Medical deal did not prevent scrutiny as the agencies are free to investigate and seek enforcement against deals that are not reportable. Here, FTC used the failure to file the JC Medical transaction against Edwards in the preliminary injunction proceeding, claiming it was an implied admission that the simultaneous JenaValve acquisition would raise antitrust risk.[[N:Pl.&rsquo;s Proposed Findings of Fact and Conclusions of Law, <em>FTC v. Edwards Lifesciences Corp.</em>, No. 1:25-cv-02569-RC, Dkt. 169 at 99-100 (D.D.C. Dec. 16, 2025).]]</li> </ul> </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{94778AB0-AEC9-47BF-AA1C-77B135A77779}https://www.arnoldporter.com/en/perspectives/publications/2026/07/global-anti-corruption-insights-summer-2026Marcus A. Asnerhttps://www.arnoldporter.com/en/people/a/asner-marcus-amarcus.asner@arnoldporter.comSoo-Mi Rheehttps://www.arnoldporter.com/en/people/r/rhee-soomisoo-mi.rhee@arnoldporter.comJohn Tanhttps://www.arnoldporter.com/en/people/t/tan-johnjohn.tan@cn.arnoldporter.comDaniel Bernsteinhttps://www.arnoldporter.com/en/people/b/bernstein-danieldaniel.bernstein@arnoldporter.comCaroline Lee Dorseyhttps://www.arnoldporter.com/en/people/d/dorsey-carolinecaroline.dorsey@arnoldporter.comIn this Newsletter, we highlight significant policy and case developments concerning the U.S. Foreign Corrupt Practices Act and other federal laws used in bribery cases, along with a few anti-corruption updates from around the world.Thu, 16 Jul 2026 00:00:00 -0500<p>The U.S. Department of Justice (DOJ) has continued to enforce the Foreign Corrupt Practices Act (FCPA) in 2026, while also seeking to dismiss certain high-profile FCPA prosecutions that began before the second Trump administration.</p> <p>Civil enforcement has remained comparatively quiet, with no new FCPA enforcement actions by the U.S. Securities and Exchange Commission (SEC) so far this year. Although the SEC has not made any official policy pronouncements regarding the FCPA, top enforcement officials there have discussed new approaches to the enforcement of securities laws more generally.</p> <p>Across the pond, the UK Serious Fraud Office (SFO) entered into its first deferred prosecution agreement in several years, and the EU adopted a new Anti-Corruption Directive.</p> <p>Meanwhile, Chinese authorities have updated a regulatory framework for criminal bribery and issued new guidance on the enforcement of a commercial bribery law, while continuing to focus on anti-corruption investigations and prosecutions.</p> <p>We cover these stories and more below.</p> <h2>DOJ Resolves FCPA Case in Medical Device Industry Under New Corporate Enforcement Policy</h2> <p>In March, DOJ issued a formal <a rel="noopener noreferrer" href="https://www.justice.gov/criminal/media/1431846/dl?inline" target="_blank">declination letter</a> to French medical device company Balt SAS and its U.S. subsidiary pursuant to the department&rsquo;s revised Corporate Enforcement and Voluntary Self-Disclosure Policy. According to DOJ, Balt paid bribes to a physician who served in a senior role at a state-owned French public hospital in order for the physician to cause the hospital to purchase medical devices from Balt. DOJ considered this physician to be a &ldquo;foreign official&rdquo; for purposes of the FCPA. In granting a declination, DOJ credited Balt&rsquo;s timely self-disclosure, full cooperation, appropriate remediation, disgorgement of $1.2 million in ill-gotten gains, and parallel resolution with authorities in France. Two individuals &mdash; David Ferrera, a former Balt executive in the United States, and Marc Tilman, a former consultant to Balt &mdash; have been <a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-resolves-foreign-bribery-investigation-balt-sas-healthcare-executive-and" target="_blank">indicted</a> on related FCPA and money laundering charges for their roles in the alleged bribery scheme.</p> <p>The Balt declination was DOJ&rsquo;s first under the new department-wide <a rel="noopener noreferrer" href="https://www.justice.gov/dag/media/1430731/dl?inline" target="_blank">corporate enforcement policy</a> released on March 10, 2026. The policy, which builds on a prior framework used by the DOJ Criminal Fraud Section, sets up three tiers of outcomes:</p> <ol> <li><em><strong>Declinations</strong></em> for companies that voluntarily self-disclose to an appropriate DOJ criminal component, fully cooperate, timely and appropriately remediate, and face no aggravating circumstances, such as serious or pervasive misconduct, significant harm, or a recent prior resolution for similar conduct. Companies that earn declinations must still disgorge ill-gotten gains and pay restitution or other compensation to victims.</li> <li><em><strong>Reduced-penalty resolutions</strong></em> for &ldquo;near miss&rdquo; situations where companies cooperate and timely remediate but otherwise fall short of a full declination, including because of delayed disclosures or the presence of aggravating factors. To encourage even imperfect cooperation, the policy offers benefits such as a non-prosecution agreement (absent particularly egregious or multiple aggravating circumstances) with a term of less than three years, no independent compliance monitor, and a fine reduction of 50% to 75% off the low end of the Sentencing Guidelines range.</li> <li><em><strong>Discretionary credit</strong></em> for companies that do not voluntarily self-disclose but still cooperate or remediate to some degree. In considering monetary penalties for these companies, DOJ will weigh the effectiveness of the company&rsquo;s compliance program, the quality and timing of cooperation, and the steps taken to fix the underlying problem.[[N:For more commentary on the revised corporate enforcement policy, see Arnold &amp; Porter&rsquo;s March 2026 <em><a href="/en/perspectives/blogs/enforcement-edge/2026/03/dojs-department-wide-message-to-the-white-collar-bar"><em>Enforcement Edge</em> blog post</a></em>.]]</li> </ol> <h2>DOJ Litigates Rare Corporate Indictment Under FCPA</h2> <p>In March 2026, SGO Corporation Limited (SGO) &mdash; the parent of the voting machine and election services company known as Smartmatic &mdash; filed a motion to dismiss FCPA charges on grounds of vindictive and selective prosecution. SGO argues that last year&rsquo;s indictment was based, at least in part, on the company&rsquo;s &ldquo;limited role in the 2020 election and on its proper exercise of its First Amendment rights both to publicly and vehemently defend its integrity and to bring defamation lawsuits against the President&rsquo;s political allies and Fox News.&rdquo; SGO further contends that the government has declined to pursue charges against similarly situated companies and individuals, pointing out that it has been 15 years since a company was last indicted under the FCPA.[[N:Motion to Dismiss for Vindictive and Selective Prosecution, <em>USA v. Donato Bautista et al.</em>, 1:24-CR-20343-KMW (S.D. Fla. March 10, 2025), ECF No. 351.]] In response, the government counters that the investigation into SGO&rsquo;s role in an alleged $1 million bribery scheme tied to the 2016 Philippine elections began in 2018 under career prosecutors and that the corporate entity was indicted only after pre-trial settlement negotiations broke down.[[N:Government&rsquo;s Response in Opposition to SGO&rsquo;s Motion to Dismiss for Vindictive and Selective Prosecution at 1-2, <em>USA v. Donato Bautista et al.</em>, 1:24-CR-20343-KMW (S.D. Fla. March 24, 2026), ECF No. 358.]] The case is being closely watched because corporate FCPA indictments are rare, and the litigation may provide insight into DOJ&rsquo;s current charging priorities.</p> <h2>Individuals Go to Trial, Plead Guilty in FCPA Prosecutions</h2> <p>DOJ has gone to trial and secured guilty pleas in FCPA cases this year.</p> <p>In February, <a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/former-coal-company-executive-convicted-international-bribery-and-money-laundering-scheme" target="_blank">a federal jury</a> in Pennsylvania found Charles Hunter Hobson, former vice president of Corsa Coal Corporation, guilty of violating the FCPA and other federal criminal laws. The case was briefly put on hold last year following President Trump&rsquo;s February 2025 <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2025/02/14/2025-02736/pausing-foreign-corrupt-practices-act-enforcement-to-further-american-economic-and-national-security" target="_blank">executive order</a> that paused most enforcement of the FCPA in light of stated concerns about harm to &ldquo;American economic competitiveness.&rdquo; But in April 2025, DOJ greenlit the case to proceed. According to DOJ, Hobson used his position to pay bribes to Egyptian government officials, via an Egyptian intermediary, to win future contracts for Corsa to sell coal products to Al Nasr Company for Coke and Chemicals, a state-owned and state-controlled manufacturing company in Egypt. In addition to the almost $140 million in coal supply contracts for Corsa, Hobson received over $200,000 in kickbacks from the Egyptian intermediary. Hobson has not yet been sentenced.</p> <p>In April, U.S. District Judge Kenneth M. Hoyt granted a post-trial motion to acquit Ram&oacute;n Alexandro Rovirosa Mart&iacute;nez of all charges, after a jury had found the defendant guilty of FCPA violations related to a bribery scheme involving the Mexican state-owned oil company PEMEX. Judge Hoyt cited a lack of evidence to support the conviction in violation of the defendant&rsquo;s Sixth Amendment Confrontation Clause rights. The judge agreed with the defendant that the government improperly introduced WhatsApp messages translated from Spanish, without calling the translators to the witness stand during trial.[[N:Memorandum and Order Dismissing Indictment and Granting an Acquittal, <em>USA v. Martinez, et al.</em>, 4:25-CR-00415 (S.D. Tex. April 14, 2026), ECF No. 147.]] On May 8, 2026, DOJ appealed to the U.S. Court of Appeals for the Fifth Circuit.[[N:Notice of Appeal, <em>USA v. Martinez, et al.</em>, 4:25-CR-00415 (S.D. Tex. May 8, 2026), ECF No. 152.]] The appeal may clarify when translated messages can be introduced at trial and whether translators must be available for cross-examination.</p> <p>In May, Alfonso Wilson, a resident of Texas and CEO of Oil Technologies Consortium, pleaded guilty to conspiracy to violate the FCPA in connection with a corruption scheme involving a $540 million contract to supply PEMEX with drilling equipment.[[N: See Information, <em>USA v. Wilson</em>, Docket No. 4:26-cr-00135 (S.D. Tex. Mar. 16, 2026), ECF No. 1; Unopposed Motion for Money Judgment, ECF No. 26.]]</p> <p>Also in May, just 11 days before his trial was set to begin, Abraham Cigarroa Cervantes &mdash; a Mexican citizen and the former finance director of Stericycle&rsquo;s Latin America division &mdash; pleaded guilty to conspiracy to violate the FCPA. According to his proffer statement, Cigarroa authorized the distribution of funds to Mexican vendors that ostensibly provided services for Stericycle; in reality, these vendors would create fake invoices and use the funds to bribe officials at Mexican state-owned entities in exchange for business opportunities and other advantages for Stericycle.[[N: Factual Proffer Statement, <em>USA v. Cervantes</em>, Docket No. 1:24-cr-20109 (S.D. Fla. Mar. 19, 2024), ECF No. 26; see also DOJ, Press Release, <a rel="noopener noreferrer" href="https://www.justice.gov/archives/opa/pr/former-finance-director-charged-role-10m-foreign-bribery-scheme" target="_blank">Former Finance Director Charged for Role in $10M Foreign Bribery Scheme</a> (Mar. 19, 2024).]] Stericycle <a rel="noopener noreferrer" href="https://www.justice.gov/archives/opa/pr/stericycle-agrees-pay-over-84-million-coordinated-foreign-bribery-resolution" target="_blank">resolved corporate FCPA charges</a> with the government back in 2022.</p> <p>In May, the DOJ filed a motion to voluntarily dismiss FCPA and other criminal charges it initially brought in 2024 against prominent Indian businessmen associated with the Adani Group for their alleged roles in a bribery and securities fraud scheme. <a rel="noopener noreferrer" href="https://www.justice.gov/usao-edny/pr/billionaire-chairman-conglomerate-and-seven-other-senior-business-executives-indicted" target="_blank">The alleged scheme involved</a> $250 million in bribes to Indian government officials to secure solar energy contracts, as well as efforts to conceal bribery from U.S. investors. When asked to explain its decision to drop the charges, DOJ told a U.S. District Court Judge for the Eastern District of New York that, in addition to the challenges of prosecuting foreign individuals for foreign conduct: &ldquo;[T]he alleged conduct did not involve criminal organizations, did not have any effect on U.S. companies, did not in any way implicate national security, was not egregious, and has been the subject of investigations in India&hellip;. The FCPA charges here therefore do not plausibly satisfy any of the bases given in the Blanche Memorandum for FCPA charges worthy of proceeding.&rdquo;[[N:Notice re Response to Court&rsquo;s June 26 Order, <em>USA v. Adani et al.</em>, Docket No. 1:24-cr-00433 (E.D.N.Y. Oct. 24, 2024), ECF No. 37.]] (The &ldquo;Blanche Memorandum&rdquo; set forth <a rel="noopener noreferrer" href="https://www.justice.gov/dag/media/1403031/dl" target="_blank">guidelines for the investigation and enforcement of the FCPA</a> following Executive Orders by President Trump last year.)</p> <p>Certain defendants who also faced civil charges have entered into a related settlement with the SEC.[[N: Consent Motion to Approve Consent Judgment, <em>SEC v. Gautam Adani and Sagar Adani</em>, No. 1:24-cv-08080 (E.D.N.Y. Nov. 20, 2024), ECF No. 34.]] Around the same time, an Adani Group company entered into a <a rel="noopener noreferrer" href="https://ofac.treasury.gov/media/935636/download?inline" target="_blank">civil settlement</a> with the U.S. Department of the Treasury&rsquo;s Office of Foreign Assets Control to resolve an investigation into potential sanctions violations.</p> <h2>DOJ Pursues Non-FCPA Foreign Corruption Cases</h2> <p>In 2026, DOJ also used federal laws beyond the FCPA to target international corruption. For example, DOJ secured a guilty plea under the Travel Act from Peter Weinzierl, an Austrian citizen and former CEO of the Austrian lender Meinl Bank AG, related to his alleged role in helping Odebrecht SA hide $170 million used to bribe government officials and defraud the Brazilian government.[[N:Minute Entry Order, <em>USA v. Weinzierl, et al</em>, Docket No. 1:20-cr-00383 (E.D.N.Y. June 11, 2026), ECF No. 28.]]</p> <p>DOJ also has pursued corruption cases involving U.S. military contracts. <a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/former-nato-official-and-turkish-defense-contractor-indicted-bribery-scheme-related-military" target="_blank">An indictment unsealed in January</a> charged Bahadir Hatipoglu, who resides in Lithuania and is the owner of companies that received contracts from the North Atlantic Treaty Organization (NATO) and the U.S. military, and Ralf Grywnow, who resides in Poland and is a former NATO procurement official, with one count of conspiracy to commit wire fraud and four counts of wire fraud. According to the indictment, Hatipoglu bribed Grywnow with cash, a romantic encounter, and assistance with the construction and furnishing of a house, in exchange for help securing contracts with the U.S. military. DOJ is seeking to extradite the individuals to the United States.</p> <p>Moreover, in April, <a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-seeks-forfeit-beverly-hills-mansion-purchased-proceeds-scheme-defraud-us" target="_blank">DOJ filed a civil forfeiture complaint in the U.S. District Court for Central California</a>, seeking the forfeiture of a Beverly Hills mansion that was allegedly purchased and renovated with proceeds from a scheme, perpetrated by a Virginia defense contractor, to defraud the U.S. Department of Defense&rsquo;s Defense Logistics Agency, bribe Iraqi officials, and violate U.S. money laundering laws.</p> <h2>SEC Signals Enforcement Shift</h2> <p>While the SEC has not brought any new FCPA cases or announced any new FCPA enforcement policies in 2026, SEC officials have spoken about their current approach to enforcement of securities laws (which include the FCPA). In April 2026, when releasing enforcement results for the 2025 fiscal year, <a rel="noopener noreferrer" href="https://www.sec.gov/newsroom/press-releases/2026-34" target="_blank">SEC Chairman Paul S. Atkins stated</a> that the Commission has &ldquo;recentered its enforcement program &hellip; by prioritizing cases that provide meaningful investor protection and strengthen market integrity.&rdquo; The same press release criticized the prior administration&rsquo;s &ldquo;aggressive pursuit of novel legal theories&rdquo; and cases &ldquo;not sufficiently grounded in the federal securities laws.&rdquo;</p> <p>In May 2026, the SEC <a rel="noopener noreferrer" href="https://www.sec.gov/newsroom/press-releases/2026-45-sec-rescinds-policy-regarding-denials-settlements-enforcement-actions" target="_blank">rescinded</a> its 54-year-old policy that prohibited settling defendants from publicly denying the agency&rsquo;s allegations. The SEC will no longer require parties to agree to &ldquo;no-deny&rdquo; provisions as a condition of settling civil enforcement actions. According to the SEC, the policy had a minimal &ldquo;effect on the public interest&rdquo; and &ldquo;created an incorrect impression that the Commission is trying to shield itself from criticism.&rdquo; Since 1972, this policy has allowed companies and individuals to accept &ldquo;neither admit nor deny&rdquo; resolutions.</p> <p>Moreover, as Arnold &amp; Porter <a href="/en/perspectives/advisories/2026/03/what-you-need-to-know-about-the-secs-enforcement-manual-update">previously reported</a>, February saw the first <a rel="noopener noreferrer" href="https://www.sec.gov/newsroom/press-releases/2026-20-secs-division-enforcement-announces-updates-enforcement-manual" target="_blank">major update</a> to the SEC Enforcement Manual since 2017. The revisions incorporate and reflect the structural change to the formal order process resulting from the Commission&rsquo;s March 2025 revocation of authority delegated to Enforcement Division staff. Now, when seeking a formal order, staff must &ldquo;succinctly describe the relevant conduct and potential violations, obtain approval from the Office of the Director, and then submit both the memorandum and the proposed formal order to the full Commission for a vote.&rdquo; The new manual also includes a more predictable and structured Wells process, concrete guidance on how cooperation credit is evaluated for companies, and the restoration of the practice of simultaneously considering settlement offers and statutory disqualification waiver requests.</p> <h2>Senator Introduces Bill to Extend FCPA&rsquo;s Statute of Limitations</h2> <p>On March 9, 2026, U.S. Senator Elizabeth Warren <a rel="noopener noreferrer" href="https://www.congress.gov/bill/119th-congress/senate-bill/4029" target="_blank">introduced a bill </a>to extend the FCPA&rsquo;s statute of limitations period to 10 years. The current draft of the bill states it would expire eight years after the date of enactment, which would give future presidential administrations an opportunity to prosecute recent violations of the FCPA. The bill was referred to the Senate Judiciary Committee. </p> <h2>International News</h2> <p>In May 2026, the SFO entered into a <a rel="noopener noreferrer" href="https://www.gov.uk/guidance/sfo-dpa-with-ultra-electronics-holdings-limited-formerly-plc" target="_blank">Deferred Prosecution Agreement</a> with Ultra Electronics Holdings Ltd., which agreed to pay approximately &pound;15 million and accept responsibility for the failure to prevent bribery in relation to public-sector contracts in Algeria and Oman. The SFO&rsquo;s investigation reportedly lasted approximately eight years. This was the SFO&rsquo;s 13th DPA and its first since 2022.</p> <p>In April 2026, the European Council <a rel="noopener noreferrer" href="https://commission.europa.eu/strategy-and-policy/policies/justice-and-fundamental-rights/democracy-eu-citizenship-anti-corruption/anti-corruption/eu-legislation-anti-corruption_en" target="_blank">adopted a new Anti-Corruption Directive</a> in an effort to harmonize definitions of corruption and penalties across EU member states. This directive covers both public-sector and private-sector (i.e., commercial) bribery. EU member states now have two years to ensure their national laws conform to the new directive. </p> <p>In April 2026, China&rsquo;s Supreme People&rsquo;s Court (SPC) and Supreme People&rsquo;s Procuratorate (SPP) jointly issued their <a rel="noopener noreferrer" href="https://www.court.gov.cn/fabu/xiangqing/497181.html" target="_blank">Interpretation on Several Issues Concerning the Application of Law in Handling Criminal Cases of Corruption and Bribery (II)</a>.[[N:For further analysis of Interpretation (II) (<span>关于</span><span>办理贪污贿赂刑事案件适用法律若干问题的解释</span>), see <a href="/en/perspectives/advisories/2026/04/china-compliance-update-anti-corruption-spring-2026">China Compliance Update: Anti-Corruption &mdash; Spring 2026</a>.]] Interpretation II took effect on May 1, 2026, and is the first major update to the interpretation of the criminal law of bribery released by the SPC and SPP in a decade. It focuses on private-sector crimes and &ldquo;entity crimes,&rdquo; meaning crimes that carry liability for companies, public institutions, government agencies, and other organizations. Notably, Interpretation (II) lowers the monetary thresholds for bribery and corruption crimes in the private sector and revises the standards for entity crimes and key industries. </p> <p>In March 2026, China&rsquo;s State Administration for Market Regulation (SAMR), a main anti-corruption enforcement agency, issued a Notice on Further Implementing the Anti-Unfair Competition Law of the People&rsquo;s Republic of China (AUCL).[[N:<span>市</span><span>场监管总局关于进一步贯彻实施《中华人民共和国反不正当竞争法》的通知</span>]] The notice directed lower-level SAMRs to focus equally on investigation and punishment of paying bribes and accepting bribes when enforcing the AUCL, one of China&rsquo;s primary laws against corruption. </p> <p>Enforcement statistics released by Chinese regulators show that anti-corruption remains a high priority, with the volume of anti-corruption investigations and prosecutions continuing to rise year on year.</p> <p><span style="font-size: small;"><em>Julian Karam contributed to this Newsletter. Julian is a summer associate in Arnold &amp; Porter&rsquo;s San Francisco office.<br /> </em></span></p> <p><span style="font-size: small;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{9FBE0E73-3213-4F57-958C-571A37640186}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/corp-fin-issues-new-cfisSara Adlerhttps://www.arnoldporter.com/en/people/a/adler-sarasara.adler@arnoldporter.comJoel I. Greenberghttps://www.arnoldporter.com/en/people/g/greenberg-joel-ijoel.greenberg@arnoldporter.comThe U.S. Securities and Exchange Commission Staff has issued updated Compliance and Disclosure Interpretations clarifying several key aspects of the federal securities laws, including that cash-settled total return equity swaps generally do not create beneficial ownership under Section 13 absent an evasive scheme, while emphasizing that arrangements designed to conceal beneficial ownership may still trigger reporting obligations. The guidance also expands disclosure requirements for activist investment vehicles and proxy campaigns, clarifies ongoing reporting obligations for Regulation Crowdfunding issuers, and confirms that certain tender offer notice requirements may be satisfied through a widely disseminated press release with a hyperlink to offer materials, rather than a newspaper advertisement.Wed, 15 Jul 2026 00:00:00 -0500<p> <p>On July 9, 2026, the SEC&rsquo;s Division of Corporation Finance issued a number of interpretations covering a variety of topics:</p> <h3>Total Return Equity Swaps</h3> <p><a rel="noopener noreferrer" href="https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/exchange-act-sections-13d-13g-regulation-13d-g-beneficial-ownership-reporting#105.08" target="_blank">Question 105.08</a>: The Staff confirmed the commonly held view that a total return equity swap that: (i) settles exclusively in cash; (ii) only refers to a specified class of equity securities as a reference security; and (iii) does not confer voting or investment power with respect to, or any right to acquire, the reference security (TRS), does not constitute Section 13 beneficial ownership of the reference securities, including any equity securities the counterparty may acquire or hold for hedging purposes. Entry into a TRS does not, by itself, evidence a plan or scheme to evade Section 13 beneficial ownership obligations (as discussed below).</p> <p><a rel="noopener noreferrer" href="https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/exchange-act-sections-13d-13g-regulation-13d-g-beneficial-ownership-reporting#105.09" target="_blank">Question 105.09</a>: A person may be deemed to be a Section 13 beneficial owner of equity securities if the person uses an arrangement with the purpose or effect of preventing the vesting of beneficial ownership as part of a plan or scheme to evade the reporting requirements of Section 13(d) or 13(g). To be part of such a plan or scheme, a TRS would need to be directly or indirectly used in connection with an &ldquo;arrangement&rdquo; to prevent the vesting of beneficial ownership by the purchaser.[[N:A TRS purchaser may be deemed to be a beneficial owner if it uses the TRS to direct the counterparty&rsquo;s voting of hedged equity securities, or to pre-arrange the acquisition of such securities. Entry into a TRS solely for economic exposure to the reference security, without more, does not prevent the vesting of, or create a false appearance regarding, beneficial ownership as part of a plan or scheme to evade Section 13 reporting requirements.]]</p> <p><a rel="noopener noreferrer" href="https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/exchange-act-sections-13d-13g-regulation-13d-g-beneficial-ownership-reporting#105.10" target="_blank">Question 105.10</a>: With respect to a TRS, the inquiry with respect to a &ldquo;plan or scheme to evade&rdquo; focuses on whether the person knew or was reckless in not knowing that use of the TRS would create a false appearance or illusion that the person&rsquo;s interest is economic alone.[[N: Entry into a TRS for the purpose or effect of indirectly acquiring the power to vote or a future right to acquire the reference equity security may be viewed as part of a plan or scheme to evade Section 13 reporting requirements.]]</p> <h3>Section 13 Reporting Obligations</h3> <p><a rel="noopener noreferrer" href="https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/exchange-act-sections-13d-13g-regulation-13d-g-beneficial-ownership-reporting#110.09" target="_blank">Question 110.09</a>: Where: (i) an entity is formed to raise funds to acquire securities of a specific issuer and engage in an activism campaign at that issuer; and (ii) prospective investors are informed in advance of the specific purpose for which their funds will be used, including the identity of the targeted issuer, the identities of all of the entity&rsquo;s investors must be disclosed in any Schedule 13D filed by that entity.[[N:Under Item 3 of Schedule 13D, if any part of the purchase price is represented by funds &ldquo;obtained for the purpose of acquiring, holding, trading or voting the securities,&rdquo; a description of the transaction by which the funds were obtained and the names of the parties to such transaction must be disclosed.]]</p> <p><a rel="noopener noreferrer" href="https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/exchange-act-sections-13d-13g-regulation-13d-g-beneficial-ownership-reporting#110.10" target="_blank">Question 110.10</a>: Instruction C to Schedule 13D lists the persons and entities in addition to the reporting person as to which Items 2 through 6 information must be provided when the reporting person is not a natural person. It is not intended to limit or substitute the information required by those Items as to the reporting person itself.</p> <h3>Proxy Rules</h3> <p><a rel="noopener noreferrer" href="https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/proxy-rules-schedules-14a14c#155.02" target="_blank">Question 155.02</a>: Where: (i) an entity is formed to raise funds to acquire securities of a specific issuer and engage in a proxy solicitation to change the composition of the issuer&rsquo;s board at its upcoming shareholder meeting; and (ii) prospective investors in the entity are informed in advance of the specific purpose for which their funds will be used, including the identity of the target and the purpose of the planned proxy solicitation, each investor that invested more than $500 in the entity are &ldquo;participants&rdquo; under Instruction 3(a)(iv) to Item 4 of Schedule 14A (a &ldquo;person who finances or joins with another to finance the solicitation of proxies, except persons who contribute not more than $500 and who are not otherwise participants&rdquo;) and their identities must be disclosed in the proxy statement.</p> <h3>Regulation Crowdfunding</h3> <p><a rel="noopener noreferrer" href="https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/regulation-crowdfunding#202.02" target="_blank">Question 202.02</a>: The reporting obligations of an issuer who conducted a compliant Regulation Crowdfunding offering using a crowdfunding vehicle continue until there are fewer than 300 holders of record who invested in the offering, or at least one of the events in Rule 202(b)(1), (3), (4), or (5) has occurred.[[N:The events are: the issuer is required to file reports under Exchange Act Section 13(a) or 15(d); the issuer has filed, since its most recent sale of securities, the required annual reports for at least the three most recent years and has total assets that do not exceed $10,000,000; the issuer or another party repurchases all of the securities issued in reliance on Securities Act Section 4(a)(6), including any payment in full of debt securities or any complete redemption of redeemable securities; or the issuer liquidates or dissolves its business in accordance with state law.]]</p> <h3>Tender Offer Dissemination Rules</h3> <p><a rel="noopener noreferrer" href="https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/tender-offer-rules-schedules#104.03" target="_blank">Question 104.03</a> and <a rel="noopener noreferrer" href="https://www.sec.gov/rules-regulations/staff-guidance/corporation-finance-interpretations/tender-offer-rules-schedules#131.04" target="_blank">Question 131.04</a>: Exchange Act Rules 13e-4(e)(1) (issuer tender offers) and 14(d)-4(a) (third-party tender offers) list three methods to publish, send, or give the disclosure required by Rule 13e-4(d) and Rule 14d-6, respectively, to security holders for a tender offer in which the consideration offered consists solely of cash and/or exempt securities. This requirement may be satisfied by issuing a press release (instead of the summary newspaper advertisement contemplated by the Rules) as soon as practicable on the tender offer&rsquo;s commencement date through a widely disseminated news or wire service, which contains the disclosure required by Rule 13e-4(d)(3) or Rule 14d-6(d)(2), as applicable, as well as an active hyperlink to a website address where security holders may access the tender offer materials, letter of transmittal (if any), and any other documents relating to the offer, provided that: (i) the tender offer is not subject to Rule 13e-3; and (ii) the issuer or bidder, as applicable, mails or otherwise furnishes promptly the tender offer materials to any security holder who requests such tender offer materials pursuant to the press release or otherwise.</p> </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{54296927-467C-4EB5-A2C7-8F443138E44A}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/usda-proposes-major-overhaul-of-afda-rules-in-focus-on-the-expansion-of-theMarisa N. Boccihttps://www.arnoldporter.com/en/people/b/bocci-marisa-nMarisa.Bocci@arnoldporter.comKari L. Larsonhttps://www.arnoldporter.com/en/people/l/larson-kari-lKari.Larson@arnoldporter.comAnnette E. Beckerhttps://www.arnoldporter.com/en/people/b/becker-annette-eannette.becker@arnoldporter.comStephen Patrickhttps://www.arnoldporter.com/en/people/p/patrick-stephenstephen.patrick@arnoldporter.comJeffrey C. Thomsonhttps://www.arnoldporter.com/en/people/t/thomson-jeffrey-cjeff.thomson@arnoldporter.comThis Advisory is a companion to our June 2026 Advisory on the proposed rule (Docket No. USDA-2026-0001; RIN 0560-AI70) published by the U.S. Department of Agriculture (USDA) on June 25, 2026, that would, if finalized in its current form, make significant changes to the Agricultural Foreign Investment Disclosure Act (AFIDA).&nbsp;Wed, 15 Jul 2026 00:00:00 -0500<p>This Advisory is a companion to our <a href="/en/perspectives/advisories/2026/06/usda-proposes-major-overhaul-of-afida-rules">June 2026 Advisory</a>&nbsp;on the proposed rule (Docket No. USDA-2026-0001; RIN 0560-AI70) published by the U.S. Department of Agriculture (USDA) on June 25, 2026, that would, if finalized in its current form, make significant changes to the Agricultural Foreign Investment Disclosure Act (AFIDA). Here, we focus more closely on the proposed expanded definition of &ldquo;foreign persons&rdquo; subject to filing requirements under AFIDA; in particular, the addition of a brand-new &ldquo;beneficial owner&rdquo; definition as part of the restructured &ldquo;significant interest or substantial control&rdquo; test that gives the definition broader reach. Together, these changes move AFIDA away from a purely equity-based inquiry and toward a broader look at governance and operational control. These changes, if implemented, could have far-reaching consequences to companies that have never considered themselves &ldquo;foreign&rdquo; or had to consider the requirements of AFIDA at all. </p> <h2>The Existing AFIDA Framework</h2> <p>Before getting into what the proposed rule would add, it is worth noting the current state of the law. Under AFIDA, foreign persons that acquire or transfer any interest in agricultural land, other than a security interest, are required to file a report to the Secretary of Agriculture no later than 90 days following such acquisition or transfer. 7 U.S. Code &sect; 3501(a). A &ldquo;foreign person&rdquo; is defined to include (1) any individual who is not either a citizen of the United States, the Northern Mariana Islands or the Trust Territory of the Pacific Islands or who is not lawfully admitted to the United States for permanent residence, or paroled in the United States, under the Immigration and Nationality Act; (2) any person,[[N: A &ldquo;person&rdquo; includes any individual, corporation, company, association, firm, partnership, society, joint stock company, trust, estate, or any other legal entity. 7 U.S. Code &sect; 3508(4).]] other than an individual or a government, which is created or organized under the laws of a foreign government or which has its principal place of business located outside of the United States; (3) any person, other than an individual or government, which is organized under the laws of any state and in which, a significant interest or substantial control is directly or indirectly held by any individual referenced in (1) or (2) above, a foreign government or, by any combination of such individuals, persons or governments; or (4) any foreign government. 7 U.S. Code &sect; 3508(3). </p> <p>The existing regulations define &ldquo;significant interest or substantial control&rdquo; through three equity-based tests: a single foreign person or government holding 10% or more of an entity; multiple foreign persons acting in concert who together reach 10% or more, even if none of them individually crosses that line; or foreign persons or governments who are not acting in concert but who nonetheless hold 50% or more of the entity in the aggregate. 7 C.F.R. &sect; 781.2(k). Notably, none of these prongs speak to control of the agricultural land. Accordingly, control without equity has, until now, simply not been something AFIDA reaches. The proposed &ldquo;beneficial owner&rdquo; definition, discussed below, is the USDA&rsquo;s mechanism for closing that gap by making control, on its own, an independent trigger for AFIDA reporting.</p> <h2>The Proposed &ldquo;Beneficial Owner&rdquo; Definition</h2> <p>Section 5100.2(d) of the proposed rule adds a new prong to the &ldquo;significant interest or substantial control&rdquo; test for persons defined as &ldquo;beneficial owners.&rdquo; The proposed definition of a beneficial owner is: &ldquo;[A]ny foreign person who, directly or indirectly, through any contract, understanding, relationship, or other arrangement, exercises decision-making authority over the agricultural land or the legal entity holding the land, including but not limited to the power to direct the sale, lease, or use of the property.&rdquo; Three features of this new definition stand out: (1) it is control-based, not equity-based; (2) the undefined scope of &ldquo;decision-making authority,&rdquo; and (3) &ldquo;indirectly&rdquo; is written to broadly capture complex ownership structures. </p> <p>First, by contrast to the existing law, the additional test turns on decision-making authority only regardless of whether such foreign person holds any equity interest in the underlying property. Accordingly, a foreign person with zero equity will still qualify as a beneficial owner if that person exercises the requisite authority over the land or the entity holding it. The preamble to the proposed rule illustrates the point with the board of a foreign-based nonprofit that acquires agricultural land: the board members would qualify as beneficial owners by virtue of their governance authority over the nonprofit&rsquo;s policies and practices, even though none of them holds any financial interest in the land. Note that in this example it is a foreign-based board that is directing the company and not persons that are lawfully admitted to the United States for permanent residency or otherwise excluded as described above in our discussion of the existing law. This distinction is worth keeping in mind, as the new regulations appear intended to capture entities that are controlled by persons residing outside of the United States.</p> <p>Secondly, the phrase at the heart of the new definition, &ldquo;exercises decision-making authority through any contract, understanding, relationship, or other arrangement,&rdquo; is left undefined in the proposed rule, and that gap leaves several interpretive questions open during the comment period. It is not clear whether customary passive-investor protective rights held by foreign limited partners or joint venture partners, such as budget approvals, major-decision consents, removal-for-cause provisions, and transfer restrictions, would count as decision-making authority over the land. It is likewise unclear whether the concept is limited to operational control over the actual use and disposition of the property, or whether it extends further to governance-level approval rights that constrain property decisions without affirmatively directing them. Further, would the inclusion of one or more foreign persons on the board of directors of a U.S. company constitute foreign persons having decision-making authority given that they have input (even if they do not have the ability to act on their own accord)? These are all questions that remain unanswered based on the current language set forth in the proposed rule. Because the proposed rule includes no safe harbor for customary protective rights or de minimis input, investors and practitioners structuring any transaction involving agricultural land with foreign participation are left with real uncertainty about where the line falls.</p> <p>Finally, the definition is written to reach through every layer of intermediary ownership, and it calls out circular ownership, shell corporations, trusts, and partnerships by name so that structuring around the rule through layered entities does not work. </p> <h2>Other Changes to the &ldquo;Significant Interest or Substantial Control&rdquo; Definition</h2> <p>Section 5100.2(p) of the proposed rule rebuilds &ldquo;significant interest or substantial control&rdquo; into three separate channels, and satisfying any one of them is enough to make a domestic entity a &ldquo;foreign person&rdquo; under AFIDA. </p> <p>First, the equity-based test currently in place (the 10% alone, 10% acting in concert, or 50% in the aggregate described above) is replaced with a flat 10% or greater interest in the aggregate, whether or not acting in concert. The second is the &ldquo;beneficial owners&rdquo; prong discussed in detail herein. The third is an adversary-based prong, which includes any interest held by a foreign adversary or a Foreign Adversary Controlled Entity, with no percentage floor.</p> <h2>How the &ldquo;Beneficial Owners&rdquo; Definition Differs From the SEC and CTA Beneficial Ownership Frameworks</h2> <p>The preamble of the proposed rule acknowledges that other federal regulations already use the phrase &ldquo;beneficial ownership&rdquo; in different ways, and it takes care to distinguish the AFIDA proposal from the best-known of those frameworks, SEC Rule 13d-3. Under the securities rule, beneficial ownership of a security turns on whether a person has or shares voting or investment power, meaning the ability to dispose of the security or direct its disposition.</p> <p>The proposed AFIDA definition is broader than the SEC test. The SEC&rsquo;s test is securities-centric: it asks who can vote or dispose of shares. The AFIDA test is asset-centric in that it asks who can direct the sale, lease, or use of real property, whether or not that person holds any equity or voting rights at all. Based on the text of the proposed rule, a person can qualify as an AFIDA beneficial owner purely through a management agreement, a governance document, or some other contractual arrangement that hands them operational authority over the land.</p> <p>The proposal appears to have conceptual roots in the Corporate Transparency Act&rsquo;s (CTA) &ldquo;substantial control&rdquo; test administered by FinCEN, which is similarly broad. &ldquo;Substantial control&rdquo; under the CTA includes anyone who exercises substantial control over an entity through a senior officer position, has the ability to appoint or remove senior officers, has substantial influence over company decisions, or has any other form of substantial control. Like the definition in the proposed AFIDA rule, &ldquo;substantial control&rdquo; requires no ownership interest and there is no cap on how many people can qualify. 31 C.F.R. &sect; 1010.380. However, the two frameworks diverge in scope. The CTA test is entity-focused, looking only at control over the reporting company (which, per current FinCEN rules, only includes entities formed outside of the United States), while the AFIDA proposal extends to control over either the entity (including domestic entities) or the land itself.</p> <h2>Roles and Structures That May Be Captured Under the &ldquo;Beneficial Owners&rdquo; Definition</h2> <p>Every category discussed below is subject to one threshold qualifier: the person holding the role has to be a &ldquo;foreign person.&rdquo; With that qualifier in mind, several familiar roles could end up captured. A foreign director sitting on the board of directors of a U.S.-based organization who has governance authority over the entity that holds the land, including the power to approve or direct dispositions, leases, or changes in use, could fall within the definition. A foreign senior officer, such as a Chief Operating Officer or Chief Financial Officer with operational authority over how the property is used or disposed of, may likewise qualify if that person can direct the sale, lease, or use of the property. A foreign asset or investment manager holding contractual authority under a management or advisory agreement to direct acquisitions, dispositions, leasing, or use of the land could also be captured. The same logic applies to a foreign general partner who controls a fund or partnership holding agricultural land, even with zero or nominal equity. And, lastly, a foreign joint-venture partner or managing member with major-decision rights, approval or veto rights over sales, leases, or use of the land, or the ability to remove and replace a manager, could qualify based on control alone, even at an equity stake well below 10%.</p> <h2>Practical Implications for Deal Due Diligence and Documentation</h2> <p>The shift of the proposed rule from an equity-based test to a control-based test changes what AFIDA due diligence needs to cover. Historically, confirming AFIDA status meant reviewing a cap table or ownership schedule for foreign holders above the relevant equity thresholds. Under the proposed rule, that review would need to extend to governance and contractual control as well, including board composition, officer appointments, management and advisory agreements, and consent, veto, or removal rights held by foreign parties, regardless of their equity stake. The conceptual overlap with CFIUS&rsquo; own control-based jurisdictional test should be noted. While the two regimes are administered separately and serve different purposes, entities that have already mapped their CFIUS control profile may be able to reuse much of that analysis to assess AFIDA beneficial owner exposure.</p> <p>Several categories of transaction documents should be reviewed in light of this proposal. Limited liability company and limited partnership agreements should be reviewed for provisions granting foreign parties major decision consent rights, board or manager designation rights, or removal for cause authority. Joint venture agreements warrant particular attention where a foreign partner holds approval rights over leasing, use, or disposition of real property, even at a minority equity stake. Investment management and advisory agreements should be checked for contractual authority over acquisition, disposition, leasing, or use decisions held by a foreign manager.</p> <p>Parties negotiating acquisitions, financings, or joint ventures involving agricultural land should also consider whether AFIDA-specific representations, warranties, and closing conditions are warranted, similar to how deal documents were revised to address beneficial ownership certifications after the CTA took effect. This could include representations regarding the foreign person status of beneficial owners as newly defined, covenants to notify counterparties of changes in control that could trigger a filing obligation, and closing conditions tied to completion of any required AFIDA report.</p> <h2>Key Takeaways</h2> <p>Taken together, the proposed rule marks a fundamental shift in how AFIDA identifies a &ldquo;foreign person.&rdquo; Where the existing framework asks only who holds equity, the new &ldquo;beneficial owner&rdquo; prong asks who holds control. Accordingly, decision-making authority over agricultural land or the entity that holds it is now an independent, standalone trigger for filing, wholly apart from any ownership stake. Companies and investors with foreign participation anywhere in their governance or management structure (even those that have never before considered themselves &ldquo;foreign&rdquo; for AFIDA purposes) should evaluate the impacts of the proposed rule.</p> <p>The comment period on the proposed rule closes on August 10, 2026. We are continuing to monitor developments and can assist with assessing exposure, structuring analysis, and preparing public comments.</p> <p>This Advisory is for informational purposes only and does not constitute legal advice.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{61BA732B-6908-49DC-9D54-6F71E7E50717}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/amb-barbara-leaf-joins-bbc-news-to-discuss-diplomatic-outlook-of-us-iran-conflict<p>Arnold &amp; Porter Senior International Policy Advisor and former U.S. Ambassador Barbara Leaf joined <em>BBC News</em> to discuss the latest U.S. strikes on Iran, Tehran's threat to close the Strait of Hormuz, and ongoing efforts to negotiate an end to the conflict.</p>Tue, 14 Jul 2026 00:00:00 -0500<p>Arnold &amp; Porter Senior International Policy Advisor and former U.S. Ambassador Barbara Leaf joined <em>BBC News</em> to discuss the latest U.S. strikes on Iran, Tehran's threat to close the Strait of Hormuz, and ongoing efforts to negotiate an end to the conflict.</p> <p>Amb. Leaf explained that this week's U.S. military response appears intended to restore deterrence while avoiding a broader regional conflict, while underscoring the tenuous nature of the ceasefire that has kept the Strait of Hormuz open in a limited capacity. "The ceasefire has been exceptionally fragile since its inception," she observed.</p> <p>Turning to diplomacy, Amb. Leaf described negotiations between the United States and Iran as a work in progress, with "fierce" diplomatic activity underway. She noted, however, that the gap between the parties remains "quite wide," explaining that the United States is relying on its overwhelming military capability to bring Iran to the negotiating table while cautioning that the Iranian government is unlikely to be compelled by military pressure alone.</p>{2EE47157-475C-4785-84C6-9CD0A2AE0D1A}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/the-end-of-for-cause-removal-supreme-court-reshapes-removal-protectionsVeronica E. Callahanhttps://www.arnoldporter.com/en/people/c/callahan-veronica-rendnveronica.callahan@arnoldporter.comJohn P. Elwoodhttps://www.arnoldporter.com/en/people/e/elwood-john-pjohn.elwood@arnoldporter.comKathleen Reillyhttps://www.arnoldporter.com/en/people/r/reilly-kathleenkathleen.reilly@arnoldporter.comStephanna F. Szotkowskihttps://www.arnoldporter.com/en/people/s/szotkowski-stephannastephanna.szotkowski@arnoldporter.comAdrien K. Andersonhttps://www.arnoldporter.com/en/people/a/anderson-adrien-kadrien.anderson@arnoldporter.comJames Moeshttps://www.arnoldporter.com/en/people/m/moes-jamesjames.moes@arnoldporter.comOn June 29, 2026, the U.S. Supreme Court issued two decisions addressing the president&rsquo;s power to remove appointed federal officials, which will likely have dramatic implications for a broad range of federal independent agencies and the U.S. regulatory landscape.&nbsp;Tue, 14 Jul 2026 00:00:00 -0500<p>On June 29, 2026, the U.S. Supreme Court issued two decisions addressing the president&rsquo;s power to remove appointed federal officials, which will likely have dramatic implications for a broad range of federal independent agencies and the U.S. regulatory landscape. </p> <p>In <em><a rel="noopener noreferrer" href="https://www.supremecourt.gov/opinions/25pdf/25-332_qn12.pdf" target="_blank">Trump v. Slaughter</a></em><a rel="noopener noreferrer" href="https://www.supremecourt.gov/opinions/25pdf/25-332_qn12.pdf" target="_blank">, 609 U.S. ___ (2026)</a>, the Court held that the statutory &ldquo;for cause&rdquo; removal protection afforded to Commissioners of the Federal Trade Commission (FTC) violates the Constitution&rsquo;s separation of powers.[[N: <em>Trump v. Slaughter</em>, No. 25-332, slip op. at 2 (June 29, 2026) (quoting 15 U.S.C. &sect; 41).]] This decision overturned foundational precedent in <em><a rel="noopener noreferrer" href="https://tile.loc.gov/storage-services/service/ll/usrep/usrep295/usrep295602/usrep295602.pdf" target="_blank">Humphrey&rsquo;s Executor v. United States</a></em> that for nine decades has shielded heads of independent regulatory agencies from presidential removal at will.[[N: See <em>Humphrey&rsquo;s Ex&rsquo;r v. United States</em>, 295 U.S. 602 (1935).]] The <em>Slaughter</em> case broadly reshapes the constitutional architecture of federal independent agencies and substantially weakens the statutory insulation from at-will removal of agency heads. Notably, the dissenting opinion warned that &ldquo;dozens&rdquo; of such agencies are &ldquo;now likely to become purely executive agencies, shifting tremendous power over broad swaths of American life into the President&rsquo;s hands.&rdquo;[[N: <em>Slaughter</em>, slip. op. at 38 (Sotomayor, J., dissenting).]]</p> <p>Despite the expansion of the president&rsquo;s power to remove appointed officials at will in <em>Slaughter</em>, the <em><a rel="noopener noreferrer" href="https://www.supremecourt.gov/opinions/25pdf/25a312_5468.pdf" target="_blank">Court in Trump v. Cook</a></em><a rel="noopener noreferrer" href="https://www.supremecourt.gov/opinions/25pdf/25a312_5468.pdf" target="_blank">, 609 U.S. ____ (2026)</a>, specifically carved out the Board of Governors of the Federal Reserve System (the Federal Reserve) from the <em>Slaughter</em> decision, leaving intact for-cause protection afforded to Federal Reserve Governors. Although the Court denied the stay on the narrow ground that Governor Cook had not received the process required by statute, the majority also expressly held that the Federal Reserve&rsquo;s for-cause removal protection is consistent with Article II. The Court left unresolved whether the alleged conduct ultimately constitutes cause for Governor Cook&rsquo;s removal. </p> <p>While the Court&rsquo;s <em>Cook </em>decision is in tension with the <em>Slaughter</em> decision, the unique circumstances identified by the Court in <em>Cook</em> suggest a narrow limitation whose application beyond the Federal Reserve remains uncertain. As such, the <em>Slaughter</em> decision likely provides the presumptive legal precedent for agency independence.</p> <h2><em>Trump v. Slaughter</em>: New Precedent for Independent Federal Agencies</h2> <p>In March 2025, President Trump fired the FTC&rsquo;s two Democratic Commissioners without asserting any statutorily required grounds. Instead, the president stated that he was removing them because he believed that their continued service was inconsistent with his administration&rsquo;s priorities, invoking his authority under Article II of the Constitution. Rebecca Slaughter, one of the two removed Democratic Commissioners, filed suit against the president seeking injunctive relief to restore her to office.</p> <h3>The Majority Opinion</h3> <p>The case presented a foundational question of executive power: whether the president has the authority to fire officials at independent federal agencies at will. In the 6-3 ruling, with Chief Justice Roberts writing for the majority, the Court held that heads of multi-member independent agencies who exercise executive power &mdash; including rulemaking, adjudication, and civil enforcement power &mdash; may be removed by the president at will, without the &ldquo;for cause&rdquo; protection provided by Congress. The Court grounded its analysis in Article II of the Constitution, which vests executive power in the president and instructs the president to &ldquo;take Care that the Laws be faithfully executed.&rdquo;[[N: <em>Slaughter</em>, slip op. at 4.]] The Court explained that, because subordinate officers exist to assist the president in discharging that duty, they must remain accountable to the president &mdash; and removal power is the mechanism that enforces that accountability.</p> <p>Addressing applicable precedent, the Court reaffirmed <em>Myers v. United States</em>,[[N: <em>Myers v. United States</em>, 272 U.S. 52 (1926).]] which held that the president&rsquo;s removal power flows directly from Article II and does not depend on any subsequent statute. The Court overturned <em>Humphrey&rsquo;s Executor</em>, which permitted for-cause removal protection for the FTC in 1935, on the theory that FTC Commissioners performed only &ldquo;quasi-legislative&rdquo; and &ldquo;quasi-judicial&rdquo; functions rather than exercising &ldquo;executive power.&rdquo; The Court concluded that this characterization of the FTC, as exercising &ldquo;no part of the executive power,&rdquo; &ldquo;has not withstood the test of time.&rdquo;[[N: <em>Slaughter</em>, slip op. at 18, 21.]] In coming to its decision, the Court noted that later decisions have progressively recognized that such functions are, in fact, executive.[[N: Id. at 18-20 (citing <em>Morrison v. Olson</em>, 487 U.S. 654 (1988); <em>Free Enter. Fund v. PCAOB</em>, 561 U.S. 477 (2010); <em>Seila Law LLC v. CFPB</em>, 140 S. Ct. 2183 (2020)).]] Weighing traditional <em>stare decisis</em> factors, the Court found that the &ldquo;quality&rdquo; of the <em>Humphrey&rsquo;s</em> reasoning, its &ldquo;consistency&rdquo; with later cases, its &ldquo;workability,&rdquo; and the reliance interests at stake all favored overruling it.[[N: Id. at 21-22.]]</p> <p>Applying this framework, the Court held that the FTC &ldquo;unquestionably exercises executive power,&rdquo; pointing to its authority to promulgate rules carrying the force of law, conduct in-house adjudications backed by penalty authority, and file civil suits on behalf of the United States.[[N: Id. at 25-27.]] The Court concluded that these functions are &ldquo;the very essence of &lsquo;execution&rsquo; of the law,&rdquo; and Commissioners exercising these functions must therefore be removable by the president at will and without statutory limitation.[[N: Id. at 25, 27 (quoting <em>Bowsher v. Synar</em>, 478 U.S. 714, 733 (1986)).]]</p> <h3>Concurrence </h3> <p>While agreeing that principal officers exercising executive power must be removable at will, Justice Gorsuch&rsquo;s concurrence warned that independent agencies exercise not just executive power, but &ldquo;vast legislative and judicial powers,&rdquo; and that, after the <em>Slaughter</em> decision, the president now &ldquo;can effectively exercise all those powers too.&rdquo;[[N: Id. at 1 (Gorsuch, J., concurring).]] Justice Gorsuch observed that agencies like the U.S. Securities and Exchange Commission (SEC) hold sweeping rulemaking authority &mdash; citing its power to make such rules and regulations as necessary or appropriate to fulfill its mandate of ensuring fair and honest markets &mdash; and pointed to the SEC&rsquo;s 2024 climate-disclosure rules as a recent example of that authority in use.[[N: The SEC recently <a rel="noopener noreferrer" href="https://www.sec.gov/newsroom/press-releases/2026-49-sec-proposes-rescission-climate-related-disclosure-rules" target="_blank">issued a proposal </a>seeking to rescind these rules.]] Gorsuch also raised the prospect of what may occur when a business faces coordinated pressure from enforcement, rulemaking, and adjudication acting in concert, warning that these &ldquo;now-coordinated powers&rdquo; could be turned against &ldquo;disfavored&rdquo; individuals or entities, and suggesting that doctrines like nondelegation and the major questions doctrine may need to bear more weight going forward as a check on that combined power.[[N: See id. at 8, 11, 14-15.]]</p> <h3>Dissent</h3> <p>Justice Sotomayor&rsquo;s dissenting opinion (joined by Justices Kagan and Jackson) stated that the decision &ldquo;undoes centuries of political practice&rdquo; and elevates the president &ldquo;above his once-coequal branches.&rdquo;[[N: Id. at 2 (Sotomayor, J., dissenting).]] The dissenting justices argued the case should have begun and ended with <em>Humphrey&rsquo;s Executor</em>, which addressed the same statute under nearly identical circumstances. The dissent maintained that &ldquo;[90] years of precedent and 140 years of consistent political practice should have been more than enough to resolve this case,&rdquo; and neither the nation&rsquo;s founding nor the Constitution&rsquo;s text and structure prohibit for-cause removal protections.[[N: Id. at 13-14.]] Significantly, the dissent identified several agencies likely transformed by the decision, and noted that the government itself conceded at oral argument that the &ldquo;logic&rdquo; of its position &ldquo;extends to inferior officers and, perhaps, career civil servants, too&rdquo; &mdash; a concession the majority&rsquo;s holding does not disavow.[[N: Id. at 38, 45.]]</p> <h2><em>Trump v. Cook</em>: A Different Result for the Federal Reserve</h2> <p>Notably, the Court&rsquo;s <em>Slaughter</em> opinion explicitly states that the decision does not &ldquo;implicate the constitutionality&rdquo; of the Federal Reserve, thereby distinguishing the Court&rsquo;s decision in <em>Slaughter</em> from <em>Cook</em>.</p> <h3>Background</h3> <p>In 2022, President Biden appointed Lisa Cook to the Board of the Federal Reserve to complete former Federal Reserve Chair Janet Yellen&rsquo;s unexpired term, and in 2023 reappointed Cook to a full 14-year term set to expire in 2038.[[N: <em>Trump v. Cook</em>, No. 25A312, slip op. at 6 (June 29, 2026). The Federal Reserve Act of 1913 established the Federal Reserve Board whose seven members are appointed by the president and confirmed by the Senate to serve staggered fourteen-year terms. 12 U.S.C. &sect; 241. The statute also provides that Federal Reserve Governors may be removed only &ldquo;for cause.&rdquo; 12 U.S.C. &sect; 242.]] In August 2025, the Director of the Federal Housing Finance Agency publicly accused Governor Cook of committing mortgage fraud years before she joined the Federal Reserve Board. President Trump publicly called for Governor Cook&rsquo;s resignation, and days later purported to fire her &ldquo;for cause,&rdquo; stating that he lacked confidence in her integrity.[[N: <em>Cook</em>, slip op. at 6-7.]] This was the first time in the Federal Reserve&rsquo;s 111-year history that a president had attempted to fire a Federal Reserve Governor.[[N: Id. at 1.]]</p> <p>Governor Cook sued, arguing that her alleged conduct did not constitute &ldquo;cause,&rdquo; and that she was statutorily and constitutionally entitled to notice and an opportunity to respond before removal, which she never received. The District Court agreed and entered a preliminary injunction preventing the removal from taking effect and requiring the Federal Reserve Board to allow Cook to remain in office pending the litigation. The Court of Appeals declined to stay the injunction, and the government appealed to the Supreme Court for a stay pending appeal &mdash; not final merits review, but an order that would have permitted Governor Cook&rsquo;s removal to take effect while the underlying suit proceeded.</p> <h3>The Majority Opinion </h3> <p>Writing for a 5-4 majority (joined by Justices Sotomayor, Kagan, Kavanaugh, and Jackson), Chief Justice Roberts denied the government&rsquo;s stay application, holding that it had not shown a likelihood of success on the merits.[[N: Id. at 8-9.]] In coming to this determination, the Court made three findings rejecting the government&rsquo;s arguments. First, the Court found that the president&rsquo;s determination of &ldquo;cause&rdquo; is judicially reviewable, and that neither the statute nor the common law commits that determination to the president alone. Second, the Court found that &ldquo;any definition of &lsquo;cause&rsquo; in this context must reflect the Federal Reserve&rsquo;s unique historical status and role,&rdquo; which requires a &ldquo;substantial threshold&rdquo; showing that turns on whether the &ldquo;cause assigned&rdquo; truly &ldquo;implies an unfitness for the place,&rdquo; or is instead a pretext to secure a &ldquo;more congenial&rdquo; replacement.[[N: Id. at 11-15.]] Third, the Court found that federal courts retain equitable power to reinstate a wrongly removed officer pending litigation, consistent with historical practice protecting de facto officeholders until a court of law finally determines title to office.</p> <p>The Court ultimately made its ruling on narrow procedural grounds: that Governor Cook was entitled to notice and some opportunity to respond before removal, a right traced to the &ldquo;settled interpretation at common law&rdquo; for officers holding a fixed term limited only by removal for cause. The Court determined that because the president gave her no meaningful opportunity to respond, the removal could not stand on the record presented.</p> <p>Importantly, the Court separately affirmed that the Federal Reserve&rsquo;s removal protection is consistent with Article II, tracing its independence to the historical tradition of the First and Second Banks of the United States and emphasizing that &ldquo;[n]ot only the fact of independence but also the appearance of independence is key to the Federal Reserve&rsquo;s design.&rdquo;[[N: Id. at 14, 22-24.]] The Court expressly left open whether Governor Cook&rsquo;s alleged conduct could ultimately satisfy &ldquo;cause&rdquo; once she receives proper process, and noted the president remains free to try again if he affords her adequate notice and an opportunity to respond.</p> <h3>Concurrences</h3> <p>Justice Kavanaugh, concurring, wrote separately to stress his agreement with the majority in its decision to not leave open the question as to whether the Federal Reserve should remain independent after <em>Slaughter</em>, warning that &ldquo;even temporary uncertainty about the status of the Federal Reserve could spark political upheaval, including confusion about whether the president could immediately remove multiple governors at will, as well as turmoil in the U.S. and world economies.&rdquo;[[N:&nbsp;Id. at 2 (Kavanaugh, J., concurring).]] Justice Jackson, also concurring, wrote separately, concluding that the government had identified no cognizable injury from Governor Cook&rsquo;s continued service. She further concluded that &ldquo;the public&rsquo;s interest is not served if a President can intimidate members of the Federal Reserve into doing his bidding,&rdquo; and weighed decisively against a stay.[[N: Id. at 3 (Jackson, J., concurring).]]</p> <h3>Dissents</h3> <p>Justice Thomas dissented, arguing that the Federal Reserve Board &ldquo;unquestionably exercises executive power&rdquo; &mdash; invoking the majority&rsquo;s own language from<em> Slaughter </em>&mdash; and should therefore be subject to at-will removal without exception.[[N: Id. at 25 (Thomas, J., dissenting) (quoting <em>Slaughter</em>, slip op. at 25).]] He rejected the majority&rsquo;s analogy to the First and Second Banks as ahistorical, arguing that those banks, unlike the modern Federal Reserve, exercised no executive power and were privately run institutions with only incidental government involvement. Justice Alito, joined by Justice Gorsuch, also dissented, but on narrower procedural grounds, criticizing the majority for resolving numerous unsettled and complex legal questions on an underdeveloped record at an early, interim stage of the litigation, rather than limiting review to the two issues actually decided below.[[N: Id. at 1-4 (Alito, J., dissenting).]] Justice Barrett, dissenting separately, objected specifically to the majority reaching the constitutionality of the Federal Reserve&rsquo;s removal protections at all.[[N: Id. at 1-2 (Barrett, J., dissenting).]] She also warned that the majority&rsquo;s carve-out sits in &ldquo;serious tension&rdquo; with <em>Slaughter</em>&rsquo;s categorical rule that any agency executing a mandate against private parties exercises executive power.</p> <h2>Impact of <em>Slaughter </em>and <em>Cook</em> on Independent Agencies and Regulated Entities</h2> <p>Read together, <em>Cook </em>and <em>Slaughter</em> provide the loose outlines of a new framework regarding the president&rsquo;s removal power. <em>Slaughter</em> sets forth the default: heads of independent, multi-member agencies that exercise executive power are now removable by the president at will. <em>Cook</em> confirms that this default is not universal, carving out the Federal Reserve based on its unique historical status and role rather than any functional distinction from agencies like the FTC. As Justice Kavanaugh&rsquo;s concurrence makes clear, the Court treated this clarification as to the applicability of<em> Slaughter</em> to the Federal Reserve as urgent, resolving <em>Cook</em> the same day to avoid leaving the Federal Reserve&rsquo;s status in doubt and destabilizing its independence. Even so, the two decisions sit in tension. Read together, <em>Slaughter </em>and <em>Cook</em> establish a general rule with a historically grounded exception. <em>Slaughter </em>holds that officials within the president&rsquo;s general administrative control who exercise executive power generally must be removable at will. <em>Cook</em> holds that Federal Reserve Governors may retain for-cause protection because of the Federal Reserve&rsquo;s distinctive historical tradition, structure, and monetary-policy role. The decisions leave uncertain whether any other entity or function has a comparably distinctive historical footing.</p> <p>For regulated entities, the practical takeaway is straightforward: <em>Slaughter</em>, not <em>Cook</em>, provides the rule of general application. Financial market regulators such as the SEC and the Commodity Futures Trading Commission (CFTC) are materially indistinguishable from the FTC for purposes of this analysis, and their Commissioners&rsquo; removal protections rest on the same, now-overruled precedent. This shift likely has no immediate practical effect at the SEC or the CFTC &mdash; as both currently have no sitting Democratic Commissioners. It nevertheless creates the possibility of sudden removals in the future and should inform how regulated entities plan going forward.</p> <p>What this means is hard to predict, but it is possible that entities regulated by the SEC and/or CFTC will see faster and less predictable shifts in enforcement priorities, rulemaking agendas, and policy positions, particularly as commission composition becomes easier for a president to reshape mid-term. Regulated entities should pay close attention to how the political pressures and media scrutiny surrounding any administration&rsquo;s relationship with its appointees may translate into abrupt reversals of guidance, no-action positions, and enforcement priorities and strategies.</p> <p style="text-align: center;">* * *</p> <p>Arnold &amp; Porter continues to monitor administrative and regulatory shifts at the U.S. market regulators. Please reach out to the authors of this Advisory or your regular Arnold &amp; Porter contact for additional information. </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{8066C5FA-354D-4416-92E7-1C9A12B1279B}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/the-end-of-the-ats-road-supreme-court-limits-international-human-rights-lawsuits-in-us-courtsJohn B. Bellinger, IIIhttps://www.arnoldporter.com/en/people/b/bellinger-john-bjohn.bellinger@arnoldporter.comR. Reeves Andersonhttps://www.arnoldporter.com/en/people/a/anderson-r-reevesreeves.anderson@arnoldporter.comSally Peihttps://www.arnoldporter.com/en/people/p/pei-sallysally.pei@arnoldporter.comVolodymyr Ponomarovhttps://www.arnoldporter.com/en/people/p/ponomarov-volodymyrvolodymyr.ponomarov@arnoldporter.comOn June 23, 2026, the U.S. Supreme Court ruled in <em>Cisco Systems, Inc. v. Doe</em> that federal courts may not create new causes of action under the Alien Tort Statute (ATS), the 1789 statute that gives federal courts jurisdiction over tort suits by foreign nationals for violations of international law.Tue, 14 Jul 2026 00:00:00 -0500<p>On June 23, 2026, the U.S. Supreme Court ruled in <em><a rel="noopener noreferrer" href="https://www.supremecourt.gov/opinions/25pdf/24-856_kjfm.pdf" target="_blank">Cisco Systems, Inc. v. Doe</a></em> that federal courts may not create new causes of action under the Alien Tort Statute (ATS), the 1789 statute that gives federal courts jurisdiction over tort suits by foreign nationals for violations of international law. The Court also held that the Torture Victim Protection Act of 1991 (TVPA) does not provide for aiding-and-abetting liability. <em>Cisco</em> is the most significant ATS ruling in years: it effectively ends modern ATS litigation that has often targeted U.S. businesses operating in high-risk jurisdictions abroad with claims based on human rights violations committed by foreign governments or third parties.</p> <p>For nearly half a century, beginning with the Second Circuit&rsquo;s seminal decision in <em>Fil&aacute;rtiga v. Pe&ntilde;a-Irala</em>, foreign plaintiffs have invoked the ATS to sue hundreds of U.S. and international defendants for violations of international law abroad, such as torture, extrajudicial killing, forced labor, arbitrary detention, and forced disappearance. In <em>Sosa v. Alvarez-Machain</em>, the Supreme Court gave ATS litigation a limited stamp of approval. Although the Court held that the ATS is a jurisdictional statute and creates no new causes of action beyond the limited violations of international law that were widely recognized and accepted in 1789, it allowed federal courts to recognize a narrow class of claims based on modern international law norms under two conditions: (1) the relevant international law norm must have &ldquo;definite content and acceptance among civilized nations&rdquo; equivalent to the 1789 norms; and (2) the judiciary must exercise its discretion narrowly (described as &ldquo;vigilant doorkeeping&rdquo;) to ensure that any new ATS claim does not infringe upon the executive&rsquo;s foreign relations prerogatives. After<em> Sosa</em>, plaintiffs filed over 150 lawsuits under the ATS invoking an array of alleged modern international law norms.</p> <p><em>Sosa</em>&rsquo;s framework was controversial from the start, and the Court has consistently narrowed the ATS in the two decades that followed. We have written extensively about the various limitations the Court has imposed on ATS suits, including that ATS claims are subject to the presumption against extraterritoriality (<em><a rel="noopener noreferrer" href="https://instituteforlegalreform.com/research/as-kiobel-turns-one-its-effect-remains-unclear/" target="_blank">Kiobel v. Royal Dutch Petroleum</a></em>); foreign corporations cannot be sued under the ATS (<em><a rel="noopener noreferrer" href="https://www.lawfaremedia.org/article/jesner-v-arab-bank-supreme-court-should-not-miss-opportunity-clarify-touch-and-concern-test" target="_blank">Jesner v. Arab Bank</a></em>); and allegations of general corporate activity in the United States are not enough to establish a domestic application of the statute (<em><a rel="noopener noreferrer" href="https://www.lawfaremedia.org/article/doe-v-nestle-ats-case-dismissed-again" target="_blank">Nestl&eacute; v. Doe</a></em>). </p> <p>In <em>Cisco</em>, the Court delivered what may be the final blow to modern ATS litigation. Although <em>Cisco</em> did not disturb the narrow historical categories of ATS claims recognized in <em>Sosa</em> &mdash; assaults on ambassadors, violations of safe conduct, and piracy &mdash; those categories have played little role in modern ATS litigation. The practical effect is that, after <em>Cisco</em>, foreign plaintiffs may no longer rely on the ATS to sue for international human rights law violations in U.S. courts. It remains to be seen how the plaintiffs&rsquo; bar will respond &mdash; including whether they will seek remedies under state law, foreign law, or federal statutes such as the TVPA, the Anti-Terrorism Act (ATA), or the Trafficking Victims Protection Reauthorization Act (TVPRA), each of which has its own limitations. </p> <h2>Background</h2> <p><em>Cisco</em> involved allegations that members of Falun Gong, a Chinese religious movement, were persecuted by the Chinese government for their religious beliefs and that Cisco helped enable that persecution by developing surveillance technology used to identify and apprehend them. Plaintiffs sued Cisco and several executives under the ATS in a federal court in California. Plaintiffs alleged that Cisco and its executives aided and abetted violations of international law, including torture; cruel, inhuman, or degrading treatment; forced labor; prolonged and arbitrary detention; crimes against humanity; extrajudicial killing; and forced disappearance. One plaintiff (a U.S. citizen who could not sue under the ATS) alleged that two Cisco executives were liable under the TVPA for aiding and abetting torture. The district court dismissed the complaint, but the Ninth Circuit reversed in relevant part, holding that aiding-and-abetting liability was available under both the ATS and the TVPA. Other circuits had split on whether the ATS provides jurisdiction for aiding-and-abetting liability. The Trump administration filed <a rel="noopener noreferrer" href="https://www.supremecourt.gov/DocketPDF/24/24-856/397322/20260225165613681_24-856tsacUnitedStates.pdf" target="_blank">an amicus brief</a> in the Supreme Court urging dismissal of the suit against Cisco. </p> <h2>Ruling</h2> <p>The Supreme Court reversed the Ninth Circuit&rsquo;s decision. Writing for the 6-3 majority on the ATS issue, Justice Barrett concluded that courts may not create new causes of action under the ATS. The Court&rsquo;s reasoning rested on separation-of-powers principles and foreign-policy concerns.</p> <p>ATS cases, Justice Barrett explained, &ldquo;by their nature&rdquo; implicate foreign policy, even when brought only against U.S. defendants. Such claims almost invariably require courts to examine allegations of serious misconduct by foreign governments and foreign officials abroad. As the Court explained, recognizing new causes of action under the ATS &ldquo;would intrude on both Congress&rsquo; prerogative to provide rights of action and the power of the political branches to direct the Nation&rsquo;s foreign policy.&rdquo;</p> <p>Second, and consistent with the Court&rsquo;s recent skepticism toward implied causes of action generally, the Court emphasized that creating causes of action is a task for Congress, not the judiciary. In light of the foreign-policy implications of ATS litigation, the Court reasoned that there will always be a &ldquo;sound reason&rdquo; <em>not</em> to recognize an implied cause of action and to defer to Congress in the face of congressional silence in the ATS context. The Court also pointed to the TVPA as evidence that Congress knows how to create express causes of action for certain international human rights violations (i.e., torture and extrajudicial killing) when it chooses to do so.</p> <p>The Court separately held (8-to-1) that the TVPA does not impose liability for aiding and abetting a primary violation of the statute. The TVPA creates a cause of action against an individual who, under color of foreign law, &ldquo;subjects&rdquo; another to torture or extrajudicial killing. The Court concluded that the TVPA&rsquo;s use of the word &ldquo;subjects&rdquo; was not enough to create secondary liability.</p> <p>Justice Jackson, joined by Justice Kagan, agreed with the TVPA holding but not all of the majority&rsquo;s reasoning. Justice Sotomayor dissented, arguing that the Court has effectively overruled <em>Sosa</em> (without directly saying so) and improperly foreclosed claims alleging serious violations of international law.</p> <h2>Implications</h2> <p>After <em>Cisco</em>, the ATS is no longer available for plaintiffs to bring claims under modern international human rights norms in U.S. courts. Indeed, the effects of <em>Cisco</em> are already being felt. In <em><a rel="noopener noreferrer" href="https://www.ca4.uscourts.gov/opinions/251043.P.pdf" target="_blank">Al Shimari v. CACI Premier Technology Inc.</a></em>, the defendant has <a rel="noopener noreferrer" href="https://news.bloomberglaw.com/federal-contracting/caci-says-high-court-ruling-requires-tossing-abu-ghraib-verdict" target="_blank">asked</a> the Fourth Circuit to revisit a $42 million jury verdict arising from alleged abuses at Abu Ghraib prison in Iraq, arguing that <em>Cisco</em> bars the plaintiffs&rsquo; ATS conspiracy and aiding-and-abetting theories. </p> <p>For U.S. companies, <em>Cisco</em> ends two decades of exposure to ATS claims premised on violations of international human rights law abroad. Previously, in <em>Mohamad v. Palestinian Authority</em>, the Supreme Court held that corporations may not be sued under the TVPA (which extends liability only to an &ldquo;individual&rdquo;). <em>Mohamad</em> and <em>Cisco</em> thus significantly narrow the federal causes of action plaintiffs have used to bring international human rights claims in the United States. <em>Cisco</em>, however, does not eliminate all potential human-rights-related litigation risks in U.S. courts. First, the decision did not disturb the narrow historical international law norms recognized in <em>Sosa</em> &mdash; assaults on ambassadors, violations of safe conduct, and piracy &mdash; although those norms have played a minimal role in modern human rights litigation. Second, plaintiffs may still bring direct liability claims under the TVPA against individual defendants for torture or extrajudicial killing or against individuals or corporations under the TVPRA, the ATA, or other federal and state-law theories where available. For example, as we mentioned in our <a href="/en/perspectives/advisories/2025/02/anti-terrorism-act-suits-against-foreign-states">ATA Advisory</a>, there is a growing trend in federal courts to expand the pool of potential defendants and the scope of liability under the ATA. Plaintiffs may also seek remedies in foreign courts or pursue non-litigation strategies, including regulatory complaints, sanctions requests, export-control referrals, and public pressure campaigns.</p> <p>Companies seeking guidance on these issues should contact the authors of this Advisory or their usual Arnold &amp; Porter contact.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{7CE874CB-CDAF-495A-9EC7-5BEC1819B2E6}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/reassessing-cmmcThomas A. Pettithttps://www.arnoldporter.com/en/people/p/pettit-thomasthomas.pettit@arnoldporter.comRonald D. Leehttps://www.arnoldporter.com/en/people/l/lee-ronald-dRonald.Lee@arnoldporter.comThe U.S. Department of Defense has temporarily suspended implementation of Cybersecurity Maturity Model Certification (CMMC) Phase II while it conducts a 60-day review of the program, citing concerns over high compliance costs, limited third-party assessment capacity, and impacts on the defense industrial base. Although third-party certification requirements are on hold, defense contractors must continue to comply with existing cybersecurity obligations &mdash; including NIST SP 800-171, DFARS safeguarding and reporting requirements, and CMMC Level 1 and Level 2 self-assessments &mdash; while monitoring potential reforms and upcoming guidance.Tue, 14 Jul 2026 00:00:00 -0500<p> <p>On July 13, 2026, the U.S. Department of Defenser (DOD) <a rel="noopener noreferrer" href="https://federalnewsnetwork.com/wp-content/uploads/2026/07/CIO-CMMC-Reform-Memo_26-P-1023.pdf" target="_blank">temporarily suspended</a> Cybersecurity Maturity Model Certification (CMMC) Phase II requirements &mdash; originally scheduled to take effect on November 10, 2026 &mdash; pending a review by the CMMC Reform Task Force. (Our <a href="https://www.arnoldporter.com/en/perspectives/advisories/2025/09/cmmc-final-rule-key-takeaways-for-defense-contractors" target="_self">September 2025 Advisory</a> detailed the CMMC phases and other CMMC program requirements.) DOD suspended CMMC Phase II due to concerns about &ldquo;prohibitive compliance costs, severe shortages in third-party assessment capacity, and complex regulatory timelines&rdquo; as well as reports from the Small Business Administration indicating &ldquo;that the current CMMC program is structurally incompatible with our need to rapidly expand the DIB [Defense Industrial Base].&rdquo;</p> <p>Pursuant to the DOD memorandum:</p> <ul> <li>The CMMC Phase II transition is suspended, and &ldquo;all pending and future CMMC implementation milestones across DoW solicitations and contracts are held in abeyance until further notice.&rdquo;</li> <li>Although the CMMC Defense Federal Acquisition Regulation Supplement (DFARS) Program Rule gave DOD discretion to require CMMC Level 2 C3PAO certification assessments during Phase I, the memorandum instructs that &ldquo;Program Managers and requiring activities shall only include the need for CMMC Level 1 or Level 2 Self Assessments in procurement request and requirement documents.&rdquo; <a rel="noopener noreferrer" href="https://dodcio.defense.gov/Portals/0/Documents/Library/ImplementingSuspensionCMMC-PhaseII.pdf" target="_blank">DOD guidance</a> makes clear that &ldquo;Program Managers and requiring activities may <strong>not</strong> designate CMMC Level 2 (C3PAO) or Level 3 (DIBCAC) assessments during this period.&rdquo;</li> <li>DOD is establishing the CMMC Reform Task Force &ldquo;to conduct a top-to-bottom 60-day review of the certification program.&rdquo; The Task Force will &ldquo;provide recommendations for a reformed cybersecurity and operational resilience framework that prioritizes speed to capability, lowers barriers for small, medium, and non-traditional businesses, and replaces prohibitive third-party compliance models with scalable, realistic security measures.&rdquo;</li> </ul> <p>DOD&rsquo;s decision to temporarily suspend CMMC Phase II does not affect DOD contractors&rsquo; foundational cybersecurity obligations. The information safeguarding requirements in DFARS 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting, remain in effect as do the CMMC Level 1 and Level 2 self-assessment Phase I requirements in DFARS 252.204-7021. Thus, DOD contractors must continue to comply with National Institute of Standards and Technology Special Publication 800-171 Rev 2 and cloud security requirements, cyber incident reporting obligations, and other directives. DOD will also continue its efforts to &ldquo;enforce cybersecurity compliance with the NIST SP 800-171 Rev 2 standard through self-assessments and select government-led assessments, focusing on tangible cyber hygiene.&rdquo;</p> <h2>What&rsquo;s Next</h2> <ul> <li>DOD will collect information through a <a rel="noopener noreferrer" href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fsam.gov%2Fworkspace%2Fcontract%2Fopp%2F89ef9bfb0834473791e991c712698d94%2Fview&amp;data=05%7C02%7CTheresa.Denson%40arnoldporter.com%7C0393ae2f05164150a70f08dee1cce1ff%7Cd22d141fae37447facfa2e1d0e5b4969%7C0%7C0%7C639196467286744322%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&amp;sdata=A0yODMq8VbyaPDtIp6G8kdooGRprJ0o88rZUclYqwgM%3D&amp;reserved=0" target="_blank">Request for Information</a> (RFI), and industry members interested in providing input can submit responses to the RFI by August 14, 2026.</li> <li>For active solicitations that require CMMC Level 2 (C3PAO) or CMMC Level 3 status, DOD must issue amendments &ldquo;explicitly removing those requirements.&rdquo;</li> <li>For active contracts that require CMMC Level 2 (C3PAO) or CMMC Level 3 status, DOD must modify the contracts to remove those requirements &ldquo;prior to the exercise of the next option period or during the next scheduled administrative modification.&rdquo;</li> <li>DOD contractors should continue to exercise vigilance both in complying with existing DFARS requirements and in monitoring new proposed information security and supply chain requirements.</li> </ul> </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{C70D3714-EC11-4C83-B57D-05A779413E49}https://www.arnoldporter.com/en/perspectives/news/2026/07/arnold-porter-strengthens-ai-leadership-appoints-roger-maeda-as-the<strong>WASHINGTON, D.C., July 13,&nbsp; 2026</strong> &mdash; Arnold &amp; Porter is pleased to announce the appointment of Roger Maeda as the firm&rsquo;s first Chief Artificial Intelligence Officer, reinforcing its commitment to responsible and innovative artificial intelligence and the future of technology-enabled legal services.&nbsp;Mon, 13 Jul 2026 00:00:00 -0500<p><strong>WASHINGTON, D.C., July 13, 2026</strong> &mdash; Arnold &amp; Porter is pleased to announce the appointment of Roger Maeda as the firm&rsquo;s first Chief Artificial Intelligence Officer, reinforcing its commitment to responsible and innovative artificial intelligence and the future of technology-enabled legal services. Roger previously served as Director of Enterprise Applications and Application Development, leading the firm&rsquo;s enterprise application strategy and software development initiatives. As AI continues to reshape the legal industry, Arnold &amp; Porter is strengthening its leadership to guide the firm&rsquo;s AI strategy and ensure it remains at the forefront of responsible AI adoption. </p> <p>&ldquo;The firm created this role because AI is reshaping how we deliver legal services, and that shift demands dedicated leadership at the highest level,&rdquo; said Ellen Kaye Fleishhacker, Global Co-Chair of Arnold &amp; Porter. &ldquo;Roger brings a rare combination of deep technical knowledge and a clear understanding of how our lawyers and clients operate. He is the right person to help us put AI to work for our clients.&rdquo;</p> <p>&ldquo;AI is changing the way we work and the way we serve our clients, and it is evolving faster than any technology we&rsquo;ve adopted before,&rdquo; added Sean Howell, Chief Executive Officer of Arnold &amp; Porter. &ldquo;Creating the Chief AI Officer role reflects our commitment to investing in innovation, strengthening our capabilities, and ensuring Arnold &amp; Porter remains at the forefront of exceptional client service.&rdquo;</p> <p>Roger Maeda said, &ldquo;AI presents tremendous opportunities to enhance how we work and serve our clients. My focus will be on translating emerging technologies into practical solutions that empower our lawyers and business professionals while maintaining the quality, security, and service our clients expect.&rdquo;</p> <p>In his new role, Roger will lead the firm's dedicated AI team, partnering with senior leaders across innovation, technology, and business services to build, test, and deploy AI tools in support of client work.</p> <h3>About Arnold &amp; Porter</h3> <p><em>Arnold &amp; Porter combines sophisticated regulatory, litigation, and transactional capabilities to resolve clients&rsquo; most complex issues. With over 1,000 lawyers practicing in 16 offices worldwide, we offer an integrated approach that spans more than 40 practice areas. Through multidisciplinary collaboration and focused industry experience, we provide innovative and effective solutions to mitigate risks, address challenges, and achieve successful outcomes.</em></p>{5242B356-581D-4D61-A149-53243E799DDB}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/ron-levine-talks-energy-dealmaking-with-law360Ron Levine, co-chair of Arnold &amp; Porter&rsquo;s Corporate &amp; Finance Group, was recently quoted in the <em>Law360</em> article, &ldquo;State Of 2026 Energy Dealmaking: Midyear Report,&rdquo; speaking with the publication about the global and national developments that have shaped energy transactions so far this year.Mon, 13 Jul 2026 00:00:00 -0500<p>Ron Levine, co-chair of Arnold &amp; Porter&rsquo;s Corporate &amp; Finance Group, was recently quoted in the <em>Law360 </em>article, &ldquo;State Of 2026 Energy Dealmaking: Midyear Report,&rdquo; speaking with the publication about the global and national developments that have shaped energy transactions so far this year.</p> <p>Ron emphasized that the combination of factors at play could spark a phase of increased energy transactional activity, noting that elevated energy prices are a key driver.</p> <p>&ldquo;You&rsquo;ve got all the elements of a top-down growth phase in energy financing and [mergers and acquisitions],&rdquo; he said. &ldquo;And you have an external environment that&rsquo;s causing energy prices to be higher.&rdquo;</p> <p><a href="https://www.law360.com/articles/2488864/state-of-2026-energy-dealmaking-midyear-report">Read the full article</a> (subscription required).</p>{BB7F0A60-26FA-485F-A98B-C9D895C5C068}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/pallavi-mehta-wahi-comments-on-seattle-legal-market-in-law360Pallavi Mehta Wahi, Arnold &amp; Porter Chair of Western U.S. Strategic Growth and head of the firm&rsquo;s Seattle office, was recently quoted in the <em>Law360</em> article, &ldquo;New BigLaw Competition Is Changing The Seattle Market,&rdquo; discussing the importance of Seattle in the U.S. legal market.Mon, 13 Jul 2026 00:00:00 -0500<p>Pallavi Mehta Wahi, Arnold &amp; Porter Chair of Western U.S. Strategic Growth and head of the firm&rsquo;s Seattle office, was recently quoted in the <em>Law360</em> article, &ldquo;New BigLaw Competition Is Changing The Seattle Market,&rdquo; discussing the importance of Seattle in the U.S. legal market.</p> <p>&ldquo;The leading global companies in the innovation industries are right at the hub of everything going on in the world: life sciences, hospital brands, consumer brands, technology. These are the companies with sophisticated regulatory enforcement and compliance challenges,&rdquo; Pallavi said. She emphasized that Seattle is a hub for clients in industries undergoing significant periods of innovation, which require adept counsel who understands their complex regulatory, litigation, and transactional needs.</p> <p>Arnold &amp; Porter&rsquo;s Seattle office opened with just three attorneys in July 2025. Since then, the team has steadily grown to more than 40 attorneys and staff. The firm&rsquo;s office footprint also continues to grow, with Arnold &amp; Porter planning to move to a larger space by the end of the year.</p> <p><a href="https://www.law360.com/pulse/articles/2497864/new-biglaw-competition-is-changing-the-seattle-market">Read the full article</a> (subscription required).</p>{04D4B598-3E61-4517-9547-A894DDD49D3C}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/fdic-proposes-substantial-overhaul-of-confidential-information-regulationsRobert C. Azarowhttps://www.arnoldporter.com/en/people/a/azarow-robert-crobert.azarow@arnoldporter.comDavid F. Freeman, Jr.https://www.arnoldporter.com/en/people/f/freeman-david-fDavid.Freeman@arnoldporter.comAmber A. Hayhttps://www.arnoldporter.com/en/people/h/hay-amber-aamber.hay@arnoldporter.comAnthony Raglanihttps://www.arnoldporter.com/en/people/r/raglani-anthonyanthony.raglani@arnoldporter.comKevin M. Toomeyhttps://www.arnoldporter.com/en/people/t/toomey-kevin-mkevin.toomey@arnoldporter.comChristopher L. Allenhttps://www.arnoldporter.com/en/people/a/allen-christopher-lChristopher.Allen@arnoldporter.comPaul Limhttps://www.arnoldporter.com/en/people/l/lim-paulpaul.lim@arnoldporter.comThe <span>Federal Deposit Insurance Corporation (</span>FDIC) has proposed its first major update to its Confidential Supervisory Information (CSI) rules in nearly 30 years, with comments due by August 31, 2026. The proposal would reorganize the agency's disclosure regulations and, most notably, expand the circumstances under which FDIC-supervised institutions may share CSI without prior FDIC approval. If adopted, banks could disclose CSI for legitimate business purposes to a broader range of recipients &mdash; including outside counsel, auditors, consultants, IT providers, certain executives, affiliates, and potential merger partners &mdash; subject to confidentiality agreements and other conditions. The proposed changes are intended to modernize and clarify the FDIC's disclosure framework while providing institutions with greater operational flexibility.&nbsp;Comments on the proposed rule are due by August 31, 2026Mon, 13 Jul 2026 00:00:00 -0500<p>The Federal Deposit Insurance Corporation (FDIC) has proposed its first major update to the rules governing Confidential Supervisory Information (CSI) in roughly three decades. The Notice of Proposed Rulemaking (Proposed Rule), which was published in the Federal Register on June 30, 2026, seeks to &ldquo;update, clarify, and supplement&rdquo; the rules regarding the disclosure of CSI by the FDIC and others.[[N:FDIC, Disclosure of Information, 91 Fed. Reg. 39,726 (June 30, 2026).]] Perhaps most significantly for FDIC-supervised institutions, the Proposed Rule would expand the ability of such institutions to disclose CSI, including to certain professional-services providers and potential merger partners, without the pre-approval of the FDIC under certain circumstances. Comments on the Proposed Rule, which includes 30 specific questions posed by the FDIC, are due by August 31, 2026.</p> <h2>Overview</h2> <p>The Proposed Rule would reorganize Part 309 of the FDIC&rsquo;s regulations into four subparts and would relocate the service-of-process rules to a new Part 306. As revised, Part 309 would consist of the following:</p> <ol> <li><strong>Subpart A (General)</strong>: Providing a statement on the FDIC&rsquo;s authority, the scope of the regulation, and definitions</li> <li><strong>Subpart B (Freedom of Information Act)</strong>: Detailing the process for submitting and responding to FOIA requests; intended to provide greater transparency into existing FDIC practices and to add a process for handling confidential commercial information</li> <li><strong>Subpart C (Discretionary Disclosure of Confidential Information)</strong>: Relaxing the FDIC&rsquo;s current prohibition on disclosure of CSI to allow disclosure for &ldquo;legitimate business purposes&rdquo; in certain circumstances without FDIC pre-approval; for situations in which FDIC approval is still necessary, the agency&rsquo;s &ldquo;good cause&rdquo; standard is clarified</li> <li><strong>Subpart D (Disclosure of Confidential Information in Legal Proceedings in Which the FDIC is Not a Party)</strong>: Clarifying the process for seeking disclosure of CSI in legal proceedings in which the FDIC is not a party</li> </ol> <p>While all of the proposed changes have potentially significant ramifications for depository institutions and other interested parties, it is the revised Subpart C that likely will have the greatest day-to-day impact on FDIC-supervised banks.</p> <h2>Discretionary Disclosure</h2> <p>The Proposed Rule would allow insured depository institutions to disclose CSI to a number of enumerated parties, provided such disclosure was for &ldquo;legitimate business purposes&rdquo; and the recipient, excluding the institution&rsquo;s (or its affiliate&rsquo;s) own directors, officers, and employees, had entered into a written confidentiality agreement regarding the CSI. This change is a considerable expansion of the existing regulation, which contemplates disclosure only to the institution&rsquo;s own personnel and majority holding companies without prior approval. As amended, recipients newly eligible to receive CSI without prior approval would include:</p> <ul> <li>Affiliates and their directors, officers, and employees</li> <li>Outside legal counsel, accountants, and auditors</li> <li>Greater than 50% shareholders (with a greatly streamlined process compared to the existing regulation)</li> <li>&ldquo;Qualifying Service Providers,&rdquo; which would include consulting and IT providers, as well as providers of services used in delivering the institution&rsquo;s financial products and services</li> <li>An individual to whom an offer of employment as a &ldquo;senior executive officer&rdquo; (e.g., President, CEO, COO, CFO, CLO, CIO, etc.) has been made</li> <li>Insured depository institutions (including their affiliates, legal counsel, and auditors) that are potential merger counterparties, up to three times every five years, provided the potential counterparty executes a waiver of any potential claims against the FDIC</li> </ul> <p>Holding companies (i.e., shareholders owning greater than 50% of the voting stock of the subsidiary bank) also remain on the list, albeit with more streamlined procedures. Beyond being eligible recipients, holding companies also would be permitted to disclose FDIC CSI lawfully in their possession to the same categories of recipients, and under the same conditions, as their subsidiary banks.</p> <p>Parties not on the pre-authorized list would still require FDIC approval under the agency&rsquo;s clarified &ldquo;good cause&rdquo; standard, which would now include eight specific factors. In addition, institutions would generally be permitted to disclose CSI that is more than 25 years old, provided that other restrictions (e.g., privacy) would not prohibit disclosure and that the FDIC had not directed otherwise.</p> <h2>Takeaway</h2> <p>The Proposed Rule should come as a welcome development for FDIC-supervised institutions. While other prudential regulators have long permitted some of these disclosures, such as to auditors and counsel, the FDIC&rsquo;s regulations, on their face, have always been much more restrictive. Interested parties should review the details of the new provisions, as well as the 30 specific questions posed by the FDIC, and determine whether to comment.</p> <p style="text-align: center;">*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *</p> <p>If you would like to discuss the FDIC&rsquo;s Proposed Rule or determine whether to comment, please contact any of the authors of this Advisory or your usual firm contact.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{66436526-C60E-41CC-8016-6A5B40B7948D}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/fda-proposes-new-registration-and-listing-pathway-for-distributed-manufacturingHoward Sklamberghttps://www.arnoldporter.com/en/people/s/sklamberg-howardhoward.sklamberg@arnoldporter.comElizabeth Trentacosthttps://www.arnoldporter.com/en/people/t/trentacost-elizabethelizabeth.trentacost@arnoldporter.comOn July 13, 2026, the U.S. Food and Drug Administration (FDA) published a proposed rule that would amend the drug establishment registration and drug listing requirements for establishments engaged in distributed manufacturing (DM) and for foreign drug establishments.Mon, 13 Jul 2026 00:00:00 -0500<p>On July 13, 2026, the U.S. Food and Drug Administration (FDA) published a proposed rule that would amend the drug establishment registration and drug listing requirements for establishments engaged in distributed manufacturing (DM) and for foreign drug establishments.[[N: <a rel="noopener noreferrer" href="https://www.govinfo.gov/content/pkg/FR-2026-07-13/pdf/2026-14073.pdf" target="_blank">Drug Establishment Registration and Drug Listing Requirements for Establishments Engaged in Distributed Manufacturing and Certain Foreign Establishments</a>, 91 Fed. Reg. 42888 (July 13, 2026).]] First, it would create a DM-specific registration pathway for distributed manufacturing establishments (DMEs) that meet select criteria. Second, it proposes updates to the drug establishment registration and drug listing requirements to incorporate clarifying changes made to the Federal Food, Drug, and Cosmetic Act (FD&amp;C Act) in 2022 through section 2511 of the Preparing for and Responding to Existing Viruses, Emerging New Threats, and Pandemics Act (PREVENT Pandemics Act). These proposals are among a group of policy efforts that FDA has taken to support and strengthen domestic drug manufacturing. The agency hopes that the efforts will improve supply chain visibility and asserts that these changes will provide a clearer, more accurate picture of where and how drugs are made while making it easier for innovative manufacturers to operate efficiently.[[N: <a rel="noopener noreferrer" href="https://www.fda.gov/industry/fda-actions-support-and-strengthen-domestic-drug-manufacturing" target="_blank">FDA Actions to Support and Strengthen Domestic Drug Manufacturing</a> (July 10, 2026).]]</p> <p>Below, we summarize the key provisions, highlight notable changes relative to current requirements, and flag the issues of greatest interest to manufacturers and industry stakeholders.</p> <h2>Distributed Manufacturing Proposal</h2> <h3>Overview</h3> <p>Distributed manufacturing (DM) is a decentralized manufacturing strategy that uses advanced manufacturing technology. It provides an alternative to traditional manufacturing and is expected to be used when an agile approach to manufacturing is necessary or beneficial to meet patient needs for medicines, and when meeting such needs is either not possible or not ideal through traditional manufacturing. The DM provisions, which are issued in part, under the Framework for Regulatory Advanced Manufacturing Evaluation (FRAME) initiative, apply to &ldquo;distributed manufacturing establishments&rdquo; (DMEs). </p> <p>The concept of a DME is based on a hub-and-spoke model &mdash; the DM hub and the DM unit &mdash; and eligibility for treatment as a DME requires meeting numerous stringent criteria, covered below. A graphical depiction of the hub and spoke model that underlies FDA&rsquo;s proposal is below:</p> <p><img alt="Infographic illustrating a Distributed Manufacturing Establishment (DME) hub-and-spoke model, showing a centralized quality unit overseeing multiple distributed manufacturing units through a unified pharmaceutical quality system for scalable drug manufacturing." src="/-/media/images/advisory-assets/2026/07/distributed-manufacturing-establishment.png?rev=63a06707ccd44523995a48181e410ab0&amp;hash=30A1B0A09DFE21DB52E1FE8BC93FF6AD" width="1000" height="666.9" /></p> <p>Under the proposal, the DME could register as a single drug manufacturing establishment, even where the DMUs are located in geographically disparate areas. Currently, each DMU and the DM hub[[N: A DM hub is the business at one physical location that serves as the primary location of the quality unit responsible for implementing the unified pharmaceutical quality system to direct, monitor, and control the manufacture of drugs to ensure product quality at the DME, including ensuring that all DMUs within the DME at any location are and remain equivalent in design and operation. 91 Fed. Reg. at 42903.]] (if it engages in manufacturing) would be required to register as separate establishments, even where they operate collectively as one establishment. </p> <h3>DME Criteria</h3> <p>A DME comprises a DM hub and one or more DMUs that meet the following criteria:</p> <ul> <li>The DMUs are demonstrated to be and remain equivalent in design and operation at any location.</li> <li>The DMUs engage in the manufacture, preparation, propagation, compounding, or processing of the <strong>same drug(s)</strong> at one or more physical location(s), under the oversight and control of a single quality unit, which has a management structure located at the DM hub and has implemented a unified pharmaceutical quality system (UPQS).</li> <li>Collectively, the hub and DMUs &mdash; <ul> <li>&nbsp;(a) Operate under one management pursuant to a manufacturing strategy designed to be decentralized</li> <li>(b) Were subject to a preapproval inspection in connection with an approved marketing application that describes the use of a decentralized manufacturing strategy for at least one drug of each profile class[[N: Profile class &ldquo;refers to the categorization of different processing conditions and product types. Immediate-release, delayed-release, and extended-release solid oral dosage forms would be different profile classes of drugs.&rdquo; 91 Fed. Reg. 42894.]] manufactured by the distributed manufacturing establishment and is an approved 505(b)(1) or 505(b)(2) NDA, ANDA, new animal drug application (NADA) (or abbreviated applications), or an original biologic license application or biosimilar (i.e., a 351(a) or 351(k) BLA)</li> </ul> </li> <li>At least one DMU is capable of moving or being moved to another physical location or there are at least two DMUs in the DME if none can be moved.</li> </ul> <p>FDA&rsquo;s proposal would allow DMEs to manufacture certain products that lack an approved application (such as over-the-counter monograph drugs), provided that each non-application product is the same profile class as one or more drugs manufactured by the DME for an approved application that describes the use of a decentralized manufacturing strategy.</p> <p>This definition does not permit arrangements where different contract manufacturing organizations are hired to operate a DMU to manufacture the same drug(s) at multiple locations, largely due to potentially differing and competing quality systems which frustrate the ability to ensure that equivalence in design and operations is maintained across the DMUs. Nor are relabelers, repackers, or salvagers that are third parties to the applicant and the manufacturer and do not operate under the ownership or control of the manufacturer eligible for consideration as a DME &mdash; they fail to meet the requirement of having the requisite UPQS.</p> <h3>Mechanics</h3> <p>In terms of who must register, how, and when, FDA adapted 21 CFR Part 207 to include DM-specific provisions. For example, proposed sec. 207.17(b) creates a separate registration requirement for DMEs that is similar to the general requirement for establishments in 207.17(a). DM-specific timing requirements for registration are also provided, which are tailored to the hub-and-spoke model of a DME (e.g., registration of a DME no later than five calendar days after the first domestic DMU begins to manufacture a drug for commercial distribution, or before a drug manufactured at any foreign DMU is imported or offered for import into the United States, whichever of the two occurs first). For the information required for registration, the proposal would require similar information in scope to the information currently required for establishment registration, but with differences accounting for the hub-and-spoke model for a DME. For example, FDA proposes assigning the UFI and FDA Establishment Identifier (FEI) to the DM hub and is proposing to require a unique identifier for each DMU (e.g., a sub-FEI number). </p> <p>FDA notes that an establishment registered as a DME that does not meet the DME requirements (or falls out of compliance such as by a DMU failing to remain equivalent in design and operation to other DMUs in the DME and the registrant does not bring the DMU into equivalence) would not be &ldquo;duly&rdquo; registered and drugs manufactured at the establishment would be deemed to be misbranded. Note, FDA intends to provide additional details on complying with cGMPs in an FDA guidance on cGMP considerations for DM that will &ldquo;assist manufacturers in addressing the complexities associated with DM when complying with FDA&rsquo;s cGMP requirements (e.g., equivalency, control procedures implemented under a UPQS, and mobile units).&rdquo;[[N: 91 Fed. Reg. 42894.]]</p> <h3>Impact</h3> <p>FDA touts the proposed DME registration requirements as benefitting industry, the government, and patients by &ldquo;increas[ing] visibility into the drug supply chain, as the co-registration of DME hub and spokes would enable FDA to correctly map out each DM configuration and understand the relationships between all components, supporting FDA's efforts to prevent and mitigate drug shortages and respond to unsafe products.&rdquo;[[N: 91 Fed. Reg. at 42899.]]</p> <p>Presently, DM is not widespread and FDA concedes it &ldquo;remains uncertain as to the likely prevalence of distributed manufacturing in the coming years.&rdquo;[[N: 91 Fed. Reg. at 42901.]] Its estimated burden for Paperwork Reduction Act of 1995 (PRA) and Preliminary Regulatory Impact Analysis (PRIA) purposes reflects that: FDA assumes zero to two new DMEs in the three years after publication of the final rule, and in subsequent years, FDA projects increased interest with three to five new DMEs in years 4-6 and eight to ten new DMEs in years 7-10.</p> <h2>Foreign Establishment Proposal</h2> <p>The proposed rule is intended to &ldquo;eliminate any perceived inconsistencies&rdquo; between section 510 of the Federal Food, Drug, and Cosmetic Act (FD&amp;C Act) and FDA regulations in 21 CFR Part 207. Section 510 of the Federal Food, Drug, and Cosmetic Act (FD&amp;C Act), as amended by the PREVENT Pandemics Act, requires every person who owns or operates any establishment within any foreign country engaged in the manufacture, preparation, propagation, compounding, or processing of a drug that is imported or offered for import into the United States to register its establishment with FDA and list such drugs. Such requirements apply regardless of whether the drug undergoes further manufacture, preparation, propagation, compounding, or processing at a separate establishment outside the United States before being imported or offered for import in the United States. </p> <p>The amendments would make clarifying changes to FDA&rsquo;s regulations by expressly requiring establishment registration and product listing for foreign establishments that manufacture, repack, relabel, or salvage a drug that is imported or offered for import into the United States <em>regardless of whether the drug undergoes further manufacture, preparation, propagation, compounding, or processing at a separate foreign establishment before being imported or offered for import into the United States</em>. The current regulations at 21 CFR 207.17(a) do not include this italicized phrase. In addition, FDA stated in the 2016 Registration and Listing Final Regulatory Impact Analysis (FRIA)[[N: <a rel="noopener noreferrer" href="https://www.fda.gov/media/100022/download" target="_blank">Requirements for Foreign and Domestic Establishment Registration and Listing for Human Drugs, Including Drugs That Are Regulated Under a Biologics License Application, and Animal Drugs, Final Regulatory Impact Analysis, Final Regulatory Flexibility Analysis, Unfunded Mandates Reform Act Analysis</a> (Aug. 2016).]] that a foreign API manufacturer that only distributes an API outside of the United States is not required to register even if the finished product manufactured from the API is eventually imported into the United States. These present differences between the statute and the regulations and FDA&rsquo;s statement could result in confusion about who must register and list &mdash; even though it is currently FDA&rsquo;s position that establishments must register and list if their product undergoes further manufacture, preparation, propagation, compounding, or processing at a separate foreign establishment before being imported or offered for import into the United States because of the self-implementing requirement of section 510 of the FD&amp;C Act. </p> <p>FDA&rsquo;s approach is consistent with its perspective on severability. FDA&rsquo;s stance is that the foreign establishment and drug listing requirements are severable from the DM proposal such that if the rule is finalized and a court determines one or more of the DM provisions to be invalid, that partial invalidation should not render as invalid any of the foreign establishment registration and drug listing provisions. FDA also takes the position that each of the proposed foreign establishment registration and listing provisions may operate independently from one another, and if the application of any portion of such provisions of this rule is determined to be invalid with respect to a particular circumstance, the agency intends that such provisions would remain applicable to all other circumstances.[[N: 91 Fed. Reg. at 42898.]]</p> <p>Through these amendments, FDA seeks greater visibility into the drug supply chain, anticipates that unregistered foreign firms will more clearly understand their drug establishment registration and product listing obligations, and anticipates increased compliance among covered foreign establishments. FDA also notes that this allows equal application of the registration and listing requirements for foreign and domestic establishments. The practical impact is that, through increased establishment registration and product listing, FDA can exercise more oversight of the drug supply chain. Establishment registration is the primary way for FDA to identify drug manufacturers and is the primary source used to include establishments in FDA&rsquo;s establishment site selection model that determines routine inspection priority. </p> <p>The anticipated impact of the foreign establishment registration and listing provisions on industry is higher than for DMEs and is expected to have a greater impact on over-the-counter (OTC) manufacturers. FDA estimates that the proposal will cover about 25 foreign establishments that manufacture a drug subject to an approved application and about 1,600 establishments that manufacture an OTC monograph drug, for a total estimate of 1,313 respondents submitting an initial foreign establishment registration for 1,625 currently unregistered foreign manufacturing establishments. FDA further estimates that these foreign establishments will submit 550 listings for approved products and 24,000 for OTC monograph drugs. </p> <h2>Conclusion</h2> <p>Please contact one of the authors of this Advisory or your regular Arnold &amp; Porter contact if you are interested in discussing the proposed rule or its impact. Comments on the proposed rule are due by September 11, 2026.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{1B487AB6-5C8A-478F-8DAE-E34781339621}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/puget-sound-business-journal-interviews-pallavi-mehta-wahi-on-arnold-porter-seattle-growthPallavi Mehta Wahi, Arnold &amp; Porter Chair of Western U.S. Strategic Growth and head of the firm&rsquo;s Seattle office and India practice, was recently quoted in the <em>Puget Sound Business Journal</em> article, &ldquo;Law firm Arnold &amp; Porter to expand with move to Seattle&rsquo;s One Union Square,&rdquo; discussing the firm&rsquo;s ongoing strategic West Coast growth.Fri, 10 Jul 2026 00:00:00 -0500<p>Pallavi Mehta Wahi, Arnold &amp; Porter Chair of Western U.S. Strategic Growth and head of the firm&rsquo;s Seattle office and India practice, was recently quoted in the <em>Puget Sound Business Journal</em> article, &ldquo;Law firm Arnold &amp; Porter to expand with move to Seattle&rsquo;s One Union Square,&rdquo; discussing the firm&rsquo;s ongoing strategic West Coast growth.</p> <p>Since the firm&rsquo;s Seattle office opened with just three attorneys in July 2025, the team has steadily grown to more than 40 attorneys and staff. The publication described it as having nearly doubled in size since its last office opening. &ldquo;Arnold &amp; Porter&rsquo;s Seattle office at U.S. Bank Center launched with 25 employees,&rdquo; PSBJ wrote. &ldquo;It currently has 41 attorneys and staff.&rdquo;</p> <p>The article also noted that, after establishing &ldquo;its first Seattle office with a 15,000-square-foot lease, [which] has since expanded to 25,000 square feet,&rdquo; Arnold &amp; Porter now &ldquo;plans to move to the 39,000-square-foot space by the end of the year.&rdquo;</p> <p>In an interview, Pallavi highlighted the wide range of expanding practices, noting that the Seattle office has seen &ldquo;across-the-board&rdquo; growth, including in industries such as technology, life sciences, healthcare, manufacturing, and real estate.</p> <p>She also discussed the importance of the firm operating where its clients are doing business, including in downtown Seattle.</p> <p>&ldquo;We are Seattle residents, and we are business owners in the city, and we really want to support the growth, resurgence, and invigoration of the downtown corridor,&rdquo; Pallavi said. &ldquo;We want to be where our clients are.&rdquo;</p> <p><a rel="noopener noreferrer" href="https://bizj.us/1qqbko" target="_blank">Read the full article</a>.</p>{45E82BB2-C6E4-4854-BDCC-2A0FBFA6C0BE}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/attempt-to-amend-in-the-first-upf-personal-injury-suit-failsAnand Agneshwarhttps://www.arnoldporter.com/en/people/a/agneshwar-anandanand.agneshwar@arnoldporter.comPaige Hester Sharpehttps://www.arnoldporter.com/en/people/s/sharpe-paige-hesterpaige.sharpe@arnoldporter.comLori B. Leskinhttps://www.arnoldporter.com/en/people/l/leskin-lori-blori.leskin@arnoldporter.comBrandon W. Neuschaferhttps://www.arnoldporter.com/en/people/n/neuschafer-brandon-wbrandon.neuschafer@arnoldporter.comLauren S. Wulfehttps://www.arnoldporter.com/en/people/w/wulfe-lauren-slauren.wulfe@arnoldporter.comLindsay Stronghttps://www.arnoldporter.com/en/people/s/strong-lindsaylindsay.strong@arnoldporter.comNina Levitenhttps://www.arnoldporter.com/en/people/l/leviten-ninanina.leviten@arnoldporter.comOn June 30, 2026, the U.S. District Court for the Eastern District of Pennsylvania denied the plaintiff leave to amend his complaint in <em>Martinez v. Kraft Heinz</em>, reinforcing that private ultra-processed food (UPF) personal injury claims must plausibly allege product-specific but-for causation. The court held that generalized allegations linking UPFs to disease and industry-wide liability theories were insufficient to state a claim, underscoring the significant causation hurdles facing private plaintiffs while leaving the litigation landscape for government enforcement actions largely unchanged.Fri, 10 Jul 2026 00:00:00 -0500<p>On June 30, 2026, Judge Mia Roberts Perez of the U.S. District Court for the Eastern District of Pennsylvania denied plaintiff Bryce Martinez&rsquo;s motion for leave to amend his complaint against 11 major food companies, holding that his proposed First Amended Complaint (FAC) failed to cure the primary defect with his original pleading: the failure to plausibly plead a causal link between any defendant&rsquo;s ultra-processed foods (UPFs) and his alleged injuries.[[N:Mem. Op., <em>Martinez v. Kraft Heinz Co., et al.</em>, No. 2:25-cv-00377-MRP (E.D. Pa. June 30, 2026), ECF No. 162.]] The ruling is the second dismissal in the first personal injury suit targeting UPFs, and it sharpens the pleading bar that plaintiffs will need to clear in other pending and future UPF product liability litigation.</p> <p>As we discussed in a <a href="https://www.arnoldporter.com/en/perspectives/advisories/2025/12/the-latest-litigation-threat-targeting-upfs" target="_self">prior Advisory</a>, government-brought cases pose a far greater risk to food companies than personal injury cases such as <em>Martinez</em>, in part because government plaintiffs need not show specific causation. The latest ruling confirms that, at least for now, the specific causation requirement remains the central obstacle for private UPF plaintiffs.</p> <h2><em>Martinez</em>: Round Two</h2> <p>The court dismissed Martinez&rsquo;s original complaint in August 2025 for failing to identify the specific products he consumed, when and how he consumed them, and how that consumption caused his type 2 diabetes and non-alcoholic fatty liver disease diagnoses at age 16. The court described the pleading as a &ldquo;shotgun approach&rdquo; that left defendants unable to determine &ldquo;who is responsible for what.&rdquo;</p> <p>Martinez moved for leave to amend in September 2025, attaching a proposed amended complaint that named 179 specific products that the eleven defendants manufacture, and alleged consumption frequencies and product-specific harmful ingredients for each. The defendants opposed the amendment based on undue delay and futility grounds. The court ruled that the amendment would be futile.</p> <h2>The Court&rsquo;s Analysis</h2> <h3>The FAC Did Not Plead Specific, But-For Causation</h3> <p>The court held that allegations of &ldquo;increased risk,&rdquo; &ldquo;biological plausibility,&rdquo; and ingredient-disease &ldquo;association&rdquo; could not establish that any particular product, or any particular defendant&rsquo;s product, actually caused Martinez&rsquo;s injuries. Applying the but-for framework under U.S. Supreme Court precedent,[[N:<em>Bostock v. Clayton Cty.</em>, 590 U.S. 644, 656 (2020).]] the court concluded that the plaintiff did not &mdash; and likely could not &mdash; allege that eliminating any one defendant or product from the FAC would have changed Martinez&rsquo;s alleged diagnoses &mdash; a result that defeated causation. The court also held that Martinez&rsquo;s allegations connecting the rise of pediatric type 2 diabetes and nonalcoholic fatty liver disease with the rise of the UPF industry since the 1980s showed correlation, not causation, and that correlation alone cannot satisfy Pennsylvania&rsquo;s causation requirement. The court further rejected Martinez&rsquo;s reliance on an unpublished opinion in infant formula litigation,[[N:<em>Gray v. Abbott Labs.</em>, No. 10 cv 6377, 2011 WL 3022274 (N.D. Ill. July 22, 2011).]] where a single recalled, contaminated product caused an infant&rsquo;s illness almost immediately after consumption, distinguishing those facts from Martinez&rsquo;s 12-year, 179-product, multi-manufacturer consumption history.</p> <h3>Alternative Liability and Market Share Liability Do Not Fill the Gap</h3> <p>The court also rejected Martinez&rsquo;s theories of industry-wide liability under both the alternative liability and the market share liability doctrines. Martinez&rsquo;s alternative liability failed for two reasons. First, the seminal case of <em>Summers v. Tice</em>[[N:<em>Summers v. Tice</em>, 199 P.2d 1, 1-2 (Cal. 1948).]] and its Pennsylvania progeny apply where only one of a known group of tortfeasors acting identically indisputably causes a single, identifiable harm. The court found this setting readily distinguishable in this litigation, given the cumulative, decade-plus nature of Martinez&rsquo;s alleged injuries. Second, under Pennsylvania law,[[N:<em>Erlich v. Abbott Labs.</em>, 5 Phila. 249, 251 (Phila. Ct. Com. Pls. 1981).]] alternative liability requires, among other things, that all defendants&rsquo; products are identical and share the same defective qualities &mdash; a requirement Martinez&rsquo;s own pleading undercut by identifying different allegedly harmful additives in different products. Market share liability, established by a 1980 California Supreme Court case,[[N:<em>Sindell v. Abbott Labs.</em>, 607 P.2d 924, 937 (Cal. 1980).]] failed for the same reason: UPFs, as pleaded, are not fungible or chemically identical across manufacturers, and Martinez did not plead that defendants collectively hold a substantial share of the UPF market.</p> <h2>Takeaways for UPF Defendants</h2> <p><strong>First</strong>, the specific-causation bar remains a durable defense in personal injury UPF litigation and likely beyond. Even Martinez&rsquo;s markedly more detailed FAC, which named 179 products and alleged consumption frequencies and allegedly harmful ingredients for each, could not overcome the fundamental problem that generalized &ldquo;increased risk&rdquo; language cannot substitute for a plausible, product-specific causal chain. Defendants facing similar multi-product UPF claims should continue to press this deficiency early, including on any renewed motion to dismiss following an amendment.</p> <p><strong>Second</strong>, courts remain reluctant to relax causation standards through industry-wide liability theories absent true product interchangeability. The court&rsquo;s product-by-product analysis of differing additives and risk profiles is a useful roadmap for defendants confronting alternative liability or market share arguments in other UPF or multi-defendant product liability contexts.</p> <p><strong>Third</strong>, this ruling does not diminish the threat posed by government-actor litigation like <em>California v. Kraft Heinz Co.</em>[[N:Case No. CGC-25-631189 (Cal Super. Ct. Dec. 2, 2025).]] As discussed in our prior Advisory, government plaintiffs proceeding under consumer protection statutes can often rely on general causation and reasonable-consumer deception theories. The dismissal of <em>Martinez</em> may, if anything, increase the relative attractiveness of the government-enforcement path for plaintiffs&rsquo; counsel. <em>California v. Kraft Heinz Co.</em> does not yet have a briefing schedule for any pleadings challenges, and it is still too early to tell if government-plaintiff cases will face similar hurdles. </p> <p><strong>Finally</strong>, it remains to be seen how the specific-causation argument will fare in cases alleging fewer products or in other jurisdictions, including in the seven other personal injury UPF cases currently pending.[[N:See <em>Muthusami v. Kraft Heinz, et al.</em>, No. 6:26-cv-00113 (M.D. Fla.); <em>Lawton v. Kraft Heinz, et al.</em>, No. 26-cv-00044 (S.D. Miss.); <em>Sanford v. Kraft Heinz, et al.</em>, No. 7:26-cv-01430 (S.D.N.Y.); <em>Ford v. Kraft Heinz, et al.</em>, No. 3:26-cv-00077 (E.D. Ark.); <em>Kreie v. Kraft Heinz, et al.</em>, No. 1:26-cv-738 (E.D. Wis.); <em>Shabazz v. Kraft Heinz, et al.</em>, No. 515681/2026 (N.Y. Sup. Ct., Kings Cty.); <em>Peters v. Kraft Heinz, et al.</em>, No. 26CV006540 (Ga. Super. Ct., Fulton Cty.). An eighth case, <em>Jenkins v. Kraft Heinz, et al.</em>, No. 2:26-cv-00115 (E.D. La.), was voluntarily dismissed before any motion practice occurred.]] Several of those cases, for example, <em>Lawton v. Kraft Heinz</em>, in which the defendants&rsquo; motion to dismiss is pending, involve substantially fewer brands than the 179 products cited in <em>Martinez</em>. Plaintiffs may file new cases that are focused on a smaller number of products with more individualized dose-response allegations. </p> <p style="text-align: center;">* &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; * &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; *</p> <p>Arnold &amp; Porter has been tracking these developments and counseling clients on compliance and litigation strategy in the UPF space. Our team is here to help with any questions you may have.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{ECB10C71-0C0F-4CC4-BE88-933319AC4672}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/capital-snapshot-july-2026Eugenia E. Piersonhttps://www.arnoldporter.com/en/people/p/pierson-eugenia-eEugenia.Pierson@arnoldporter.comAllison Jarushttps://www.arnoldporter.com/en/people/j/jarus-allisonallison.jarus@arnoldporter.comPeter E. Duysharthttps://www.arnoldporter.com/en/people/d/duyshart-peterpeter.duyshart@arnoldporter.comEmily Crawfordhttps://www.arnoldporter.com/en/people/c/crawford-emilyemily.crawford@arnoldporter.comEmily Mahaffyhttps://www.arnoldporter.com/en/people/m/mahaffy-emilyemily.mahaffy@arnoldporter.comDylan L. Kelemenhttps://www.arnoldporter.com/en/people/k/kelemen-dylan-ldylan.kelemen@arnoldporter.comOur Legislative &amp; Public Policy team is pleased to provide the July 2026 edition of <em>Capital Snapshot</em>, which includes a monthly summary of the issues, events, and timelines driving federal policy and political decisions.Fri, 10 Jul 2026 00:00:00 -0500<p>Our Legislative &amp; Public Policy team is pleased to provide the July 2026 edition of <em>Capital Snapshot</em>, which includes a monthly summary of the issues, events, and timelines driving federal policy and political decisions. This month&rsquo;s edition of the <em>Capital Snapshot</em> contains a review of the landscape of the 119th Congress, including upcoming congressional schedules and key dates, recently-announced vacancies and special elections, and notable incumbent primary election losses. We also share updates on the FY 2027 federal funding and appropriations processes. Additionally, our team provides comprehensive updates on the latest with trade and tariffs. Furthermore, we share some salient legislative and policy updates across a variety of additional key policy areas, including: (1) defense; (2) tax; (3) financial services; (4) artificial intelligence; (5) technology; (6) data privacy; (7) health care; (8) education; and (9) energy and environment. Furthermore, we provide an overview and outlook of the upcoming 2026 midterm elections in November, including the latest developments with the Maine and Michigan U.S. Senate contests, as well as a recap of various mid-decade redistricting efforts across the country ahead of the midterms. Our team also takes a look at current public opinion polling on President Trump&rsquo;s job performance and policy priorities, and assesses economic factors and conditions that could impact the political landscape when voters head to the polls in November.</p>{68519E68-FA50-4079-9280-998F43841040}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/anti-corruption-report-features-daniel-bernstein-in-compliance-reps-and-warranties-seriesDaniel Bernstein, Arnold &amp; Porter White Collar Defense &amp; Investigations counsel, was recently quoted in a four-part <em>Anti-Corruption Report</em> series examining the role of compliance representations and warranties in managing legal and regulatory risk.Thu, 09 Jul 2026 00:00:00 -0500<p>Daniel Bernstein, Arnold &amp; Porter White Collar Defense &amp; Investigations counsel, was recently quoted in a four-part <em>Anti-Corruption Report</em> series examining the role of compliance representations and warranties in managing legal and regulatory risk.</p> <p>The first article addressed the continuing relevance of compliance reps and warranties. In the piece, Daniel noted that compliance representations and warranties &ldquo;are a form of legal protection and risk allocation,&rdquo; as well as an &ldquo;expression of a company&rsquo;s values and of what matters to a company.&rdquo; &ldquo;They are an indication of what the company and its stakeholders care about,&rdquo; he said.</p> <p>The second article covered negotiation. &ldquo;Whether compliance representations and warranties are heavily negotiated or mere boilerplate often depends on the complexity of the transaction and the money at stake, as well as on various risk factors,&rdquo; Daniel explained. &ldquo;There are costs associated with negotiating more specific representations and warranties,&rdquo; but transactions that &ldquo;present particular risks &hellip; may make more bespoke representations and warranties appropriate.&rdquo; </p> <p>The third article addressed verification and enforcement, including due diligence, site visits, transaction testing, and ongoing monitoring. Daniel noted that often &ldquo;compliance representations and warranties are accompanied by audit rights.&rdquo;</p> <p>The fourth article covered how reps and warranties have adapted to emerging risks in M&amp;A and third-party relationships. He discussed how, in addition to anti-corruption compliance, &ldquo;a lot of international companies are now paying more attention to tariffs, export controls and sanctions.&rdquo; These risks are &ldquo;not necessarily new&rdquo; but are evolving.</p> <p>Read the <a rel="noopener noreferrer" href="https://www.anti-corruption.com/21409766/compliance-reps-and-warranties-definitions-and-goals.thtml" target="_blank">first</a>, <a rel="noopener noreferrer" href="https://www.anti-corruption.com/21415821/compliance-reps-and-warranties-negotiations.thtml" target="_blank">second</a>, <a rel="noopener noreferrer" href="https://www.anti-corruption.com/21428731/compliance-reps-and-warranties-verification-and-enforcement.thtml" target="_blank">third</a>, and <a rel="noopener noreferrer" href="https://www.anti-corruption.com/21462546/compliance-reps-and-warranties-adapting-to-emerging-risks.thtml" target="_blank">fourth</a> installments (subscription required).</p>{4786DE4F-32CB-4B8E-8E85-9ECCFCD2B5D6}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/evan-rothstein-quoted-in-law360-on-key-midyear-patent-decisionsEvan Rothstein, co-chair of Arnold &amp; Porter&rsquo;s Intellectual Property practice, was quoted in the <em>Law360 </em>article, &ldquo;Biggest Rulings For Patent Attys In 2026: A Midyear Report,&rdquo; which examines several of the year's most significant patent decisions from the U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit.Thu, 09 Jul 2026 00:00:00 -0500<p>Evan Rothstein, co-chair of Arnold &amp; Porter&rsquo;s Intellectual Property practice, was quoted in the <em>Law360</em> article, &ldquo;Biggest Rulings For Patent Attys In 2026: A Midyear Report,&rdquo; which examines several of the year's most significant patent decisions from the U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit.</p> <p>Evan discussed the Federal Circuit's decision in <em>A.L.M. Holding Co. v. Zydex Industries Private Ltd.</em>, where he said the ruling provides "instructions" for patent owners when drafting exclusive license agreements to help ensure they have standing to bring infringement claims.</p> <p>Evan also highlighted another Federal Circuit ruling that he described as a significant win for patent owners because it rejected a "per se, categorical rule" that would have barred consideration of non-infringing products in reasonable royalty analyses. He explained that where infringement of one component enhances the performance or value of related products, "I can use that ancillary benefit in the other parts of the stack in my calculation of what would be part of the hypothetical negotiation for reasonable royalties."</p> <p><a rel="noopener noreferrer" href="https://www.law360.com/articles/2498166/biggest-rulings-for-patent-attys-in-2026-a-midyear-report" target="_blank">Read the full article</a> (subscription required).</p>{3A0F8364-189C-4DB2-9F14-A7A213B17DC0}https://www.arnoldporter.com/en/perspectives/news/2026/07/arnold-porter-advises-aurobindo-pharma-in-ftc-clearance-for-acquisition-of-lannett-companyArnold &amp; Porter recently represented Aurobindo Pharma Limited in obtaining Federal Trade Commission (FTC) clearance for its acquisition of Lannett Company, Inc., a manufacturer of generic pharmaceutical products, in a transaction valued at approximately $250 million.Thu, 09 Jul 2026 00:00:00 -0500<p>Arnold &amp; Porter recently represented Aurobindo Pharma Limited in obtaining Federal Trade Commission (FTC) clearance for its acquisition of Lannett Company, Inc., a manufacturer of generic pharmaceutical products, in a transaction valued at approximately $250 million.</p> <p>The transaction involved overlapping marketed and pipeline generic pharmaceutical products. Following the firm's advocacy before the FTC, the agency narrowed its competitive concerns to four products: mycophenolate mofetil oral suspension, niacin extended-release tablets, pilocarpine tablets, and rabeprazole sodium delayed-release tablets.</p> <p>Arnold &amp; Porter negotiated a consent agreement with the FTC under which Aurobindo agreed to divest those four products to Quagen Pharmaceuticals LLC, enabling the transaction to proceed. The FTC voted 2-0 to accept the consent agreement for public comment and granted early termination of the Hart-Scott-Rodino waiting period on June 18, 2026, permitting the acquisition to close.</p> <p>The Arnold &amp; Porter team was led by Antitrust partners Debbie Feinstein and David Emanuelson, counsel Barbara Wootton, and senior associate Andrew Ellingsen. Partner Betty Yan, co-head of the Life Sciences Transaction practice, also advised on the acquisition.</p>{E7D512E2-C7A7-45A6-954B-8B62D4F0EC60}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/oversight-of-laboratory-developed-tests-one-year-after-acla-v-fdaMahnu V. Davarhttps://www.arnoldporter.com/en/people/d/davar-mahnu-vmahnu.davar@arnoldporter.comPhilip R. Desjardinshttps://www.arnoldporter.com/en/people/d/desjardins-philip-rphilip.desjardins@arnoldporter.comBobby McMillinhttps://www.arnoldporter.com/en/people/m/mcmillin-bobbybobby.mcmillin@arnoldporter.comMonique Nolan, M.D., J.D.https://www.arnoldporter.com/en/people/n/nolan-moniquemonique.nolan@arnoldporter.comEva Temkinhttps://www.arnoldporter.com/en/people/t/temkin-evaeva.temkin@arnoldporter.comClaire W. Dennishttps://www.arnoldporter.com/en/people/d/dennis-claireclaire.dennis@arnoldporter.comOur latest Advisory examines the current state of laboratory developed test oversight, highlights key developments since the court&rsquo;s decision, and explores what stakeholders should be watching as policymakers consider future regulatory approaches.Thu, 09 Jul 2026 00:00:00 -0500<p>Advances in genetic medicine, coupled with recent breakthroughs in mental health and weight management, have renewed the scientific community&rsquo;s attention on the role of biomarkers in the management of disease and development of new therapeutics. Similarly, the success of expedited therapeutic approval programs and a public-private shared interest in speeding the pace of clinical trials has refocused attention on the role of validating new analytes as potential surrogates. Coupled with the rapid scaling now possible with artificial intelligence (AI), we are seeing an explosion in interest in next-generation diagnostics and wellness tools, many of which are testing existing and often outdated state and federal regulatory frameworks. Unsurprisingly, this has refreshed calls to modernize, but not hinder, the development of laboratory-developed tests, including through a proposal to expand the Centers for Medicare &amp; Medicaid Services&rsquo; (CMS) role.</p> <p>Laboratory-developed tests (LDTs) are part of a continuing debate over the appropriate scope and structure of federal oversight. The central regulatory question is how to support reliable test performance and appropriate clinical use &mdash; within the existing legal framework &mdash; while preserving the ability of laboratories to adapt to changing scientific and clinical needs. That balance is increasingly difficult because many modern tests rely on complex algorithms or data analysis that can resemble device or software functions even when the test is offered as a laboratory service. </p> <p>The current LDT landscape presents both opportunity and risk for laboratories, test developers, diagnostic manufacturers, software companies, investors, and drug developers. Although U.S. Food and Drug Administration&rsquo;s (FDA) 2024 LDT Final Rule was vacated by a court, and FDA has rescinded that rule, the absence of a comprehensive FDA framework does not mean the absence of regulatory scrutiny. Rather, the oversight environment has become more fragmented, with FDA, CMS, state laboratory regulators, accreditation bodies, payers, Federal Trade Commission (FTC), and private litigants each retaining potential roles depending on the test, claims, technology, and commercial model.</p> <p>For companies operating in this space, the most important takeaway is that LDT strategy should not be treated as a narrow laboratory-compliance issue. LDT policy now intersects with product development, clinical evidence generation, reimbursement, software regulation, promotional review, commercialization strategy, transactional diligence, and risk management. Companies that account for these issues early will be better positioned to bring tests to market, support payer coverage, withstand regulatory scrutiny, and preserve options if Congress or CMS moves toward a more formalized Clinical Laboratory Improvement Amendment (CLIA)-based framework.</p> <h2>What Authority Does FDA Likely Continue to Retain?</h2> <p>In 2024, FDA sought to formalize its long-asserted authority over laboratory-developed tests by issuing a final rule that would have regulated most LDTs as medical devices under the Federal Food, Drug, and Cosmetic Act. The rule was issued during the Biden administration after Congress considered &mdash; but ultimately declined to enact &mdash; comprehensive LDT reform legislation known as the Verifying Accurate and Leading-edge IVCT Development (VALID) Act that would have created a new category of &ldquo;in vitro clinical tests&rdquo; which would have subjected LDTs to FDA oversight. </p> <p><a href="/en/perspectives/advisories/2024/05/fdas-final-laboratory-developed-test-rule">FDA promulgated a regulation</a> that was a significant shift away from FDA&rsquo;s historical enforcement discretion approach and would have subjected laboratories to device requirements such as premarket review, quality system regulation, and adverse event reporting. <a href="/en/perspectives/advisories/2024/12/ldt-final-rule-litigation">The rule was immediately met with industry challenge</a>, culminating in litigation before the U.S. District Court for the Eastern District of Texas, which vacated FDA&rsquo;s regulation in May 2025. FDA did not appeal that ruling, and the second Trump administration subsequently rescinded the rule. This effectively reverted FDA&rsquo;s oversight over LDTs to its prior limbo, with the agency continuing to assert jurisdiction over certain aspects of diagnostic products, including test components, distributed kits, and software. As a result, manufacturers and laboratories that rely on commercially distributed equipment and reagents remain subject to FDA requirements at least in some respects.</p> <p>FDA&rsquo;s longstanding policies governing research use only (RUO) and investigational use only (IUO) products also remain an important enforcement tool in this context. Under these policies, products that are labeled and distributed for research or investigational purposes may not be promoted for clinical diagnostic use, and FDA has historically taken action where marketing practices suggest otherwise. Written RUO-related guidance is narrow, non-binding, and unfortunately predates the advent of software algorithms as an essential component to complex or high-throughput diagnostics. Still, these policies remain relevant for laboratories that rely on RUO-labeled reagents or components to develop LDTs, as FDA may scrutinize whether such products are, in practice, being used or promoted for clinical purposes. </p> <p>Together, these authorities reinforce that, even in the absence of a comprehensive LDT rule, FDA retains jurisdiction over the commercialization of the tangible inputs into LDT development, even if the agency may not regulate the laboratory service itself. Thus, FDA continues to play a meaningful role in the regulation of diagnostic testing.</p> <p>FDA also regulates certain software functions associated with diagnostic testing. For example, software that meets the definition of Software as a Medical Device (SaMD) may be regulated as a device, e.g., where it is intended to analyze or interpret medical information for clinical use. This is increasingly relevant in the LDT context, as many modern tests incorporate algorithm-driven analyses, including gene profiling, risk scoring, and other data-intensive outputs. As with physical devices, FDA&rsquo;s authority in this area turns on intended use, including how the software is designed, described, and marketed. Accordingly, even where an underlying test may be treated as an LDT, standalone or integrated software components may independently be subject to FDA oversight.</p> <p>Despite FDA&rsquo;s jurisdiction over such components even after vacatur of the LDT Final Rule, and perhaps because FDA is wary of drawing another legal challenge, the agency&rsquo;s enforcement in this space has remained limited. We expect that to continue, with narrowly targeted enforcement that is focused on components of LDT services that remain neatly within FDA&rsquo;s recognized device authorities or raise significant public health issues, such as misdiagnosis or underdiagnosis of serious or life-threatening conditions. Use of LDTs as diagnostics for drug use may also give FDA a jurisdictional lever, though here too, FDA may be reticent to take enforcement action. Laboratories and manufacturers should therefore continue to assess claims, labeling, distribution models, and validation support for products used in testing workflows, with special attention to the use of software in both sample analysis and results-report development and interpretation. </p> <p>In parallel, CMS, state programs, accreditation organizations, payers, and the FTC may remain relevant to oversight depending on the test, the claims made, and the commercial model. DOJ&rsquo;s increased attention over the use of AI in healthcare &mdash; particularly where AI is used to perform or output Medicare-reimbursed clinical care &mdash; suggests the need for diagnostics companies and providers to perform thoughtful diligence on their software providers and conduct regulatory and quality analysis on the integration of software into sample analysis, report creation, and billing workflows. Taken together, the practical result of these shifts in LDT oversight attention is not the absence of enforcement risk, but a more fragmented oversight environment requiring careful attention to the source of authority for each component of the testing ecosystem.</p> <h2>Emerging Opportunities for the Diagnostics Community to Shape Oversight?</h2> <p>In the wake of FDA&rsquo;s unsuccessful effort to assert comprehensive authority over LDTs through rulemaking, attention has shifted toward alternative frameworks for oversight. Some policymakers and stakeholders have appeared to coalesce around the view that LDT oversight may be more appropriately situated within the existing CLIA framework administered by CMS, rather than through an expansion of FDA&rsquo;s device authorities.</p> <p>This emerging view reflects, in part, the existence of established mechanisms within the current regulatory landscape that already address elements of test quality and validity. For example, the New York State Clinical Laboratory Evaluation Program (CLEP) has long served as a model for pre-use review of certain laboratory-developed tests, including assessments of analytical and clinical validity. In addition, some LDTs have historically relied on prior FDA clearance or approval pathways, while others are evaluated through payer-driven processes such as MolDx coverage, which assesses clinical validity and utility in the context of reimbursement. Policymakers have also shown increasing interest in the potential role of certified third-party reviewers to provide independent validation of test performance. Together, these existing approaches suggest a potential path forward in which CLIA serves as the core regulatory framework, supplemented by targeted mechanisms to ensure test quality and clinical reliability without fully subjecting LDTs to the medical device regulatory regime.</p> <h2>Recently Proposed Legislation</h2> <p>On May 19, 2026, Representative Neal Dunn (R-FL) introduced the <a rel="noopener noreferrer" href="https://www.congress.gov/119/bills/hr8890/BILLS-119hr8890ih.pdf" target="_blank">Enhancing Clinical Laboratory Innovation and Access Act of 2026</a>, which reflects a legislative effort to recalibrate federal oversight of laboratory-developed tests by codifying a shift away from the FDA&rsquo;s device-based framework. At its core, the proposal would clarify that LDTs are not medical devices under the Federal Food, Drug, and Cosmetic Act and fall within the scope of an updated and expanded CLIA framework administered by CMS. In doing so, the legislation seeks to provide long-sought jurisdictional clarity while establishing a pathway for more tailored, laboratory-focused oversight.</p> <p>Rather than representing a deregulatory approach, unlike previous CMS-oriented efforts such as the Verified Innovative Testing in American Laboratories (VITAL) Act, the bill reflects a reallocation of regulatory authority, shifting primary responsibility for LDT oversight from FDA to CMS while maintaining, and in some respects expanding, requirements relating to test validity, transparency, and post-market oversight. In this respect, the proposed legislation is consistent with historical attempts to enhance LDT regulatory oversight, suggesting that future reform efforts will focus on building out the CLIA framework as the central mechanism for LDT regulation.</p> <p>The window for legislative activity is narrowing as we approach November&rsquo;s elections. For those monitoring the bill&rsquo;s chances of success, they should note whether the legislation picks up additional cosponsors, receives committee consideration, and whether we see the introduction of a Senate companion. </p> <p>Notably, CMS has prepared a Request for Information (RFI) titled &ldquo;Request for Information; Clinical Laboratory Improvement Amendment (CLIA) of 1988 Regulations (CMS-3485)&rdquo; and the Office of Management and Budget concluded its review of the RFI on July 7, 2026. With the imminent release of the RFI and renewed attention by Congress, this presents an immediate opportunity for public input on the agency&rsquo;s CLIA regulations.</p> <h2>Conclusion</h2> <p>The vacatur of FDA&rsquo;s LDT Final Rule reduced, for the moment, the impending burden that would have accompanied FDA premarket review, quality system regulation, and medical device reporting for many LDTs. However, pending and potential legislative activity, including proposals to modernize CLIA, indicates that policymakers remain focused on test validity, transparency, adverse event reporting, and patient safety. Companies should use this period to assess their LDT portfolios, identify higher-risk tests, and build regulatory strategies that can adapt to future federal action. At the same time, the evolving LDT environment creates opportunities for acquisitions, licensing arrangements, laboratory partnerships, pharma and biotech collaborations, and commercialization deals.</p> <p>As covered in our previous advisories, LDTs have been the subject of significant regulatory and legislative action in recent years. We note relevant recent developments below.</p> <ul> <li><a href="/en/perspectives/advisories/2023/10/fda-proposes-to-actively-regulate-laboratory-developed-tests">FDA Proposes to Actively Regulate Laboratory-Developed Tests After Years of Enforcement Discretion</a> (October 2023)</li> <li><a href="/en/perspectives/advisories/2024/05/fdas-final-laboratory-developed-test-rule">FDA Intends To Regulate Many Clinical Labs as Medical Device Manufacturers: What You Need To Know About the Laboratory Developed Test Final Rule Issued</a> (May 2024)</li> <li><a href="/en/perspectives/advisories/2024/12/ldt-final-rule-litigation">LDT Final Rule Litigation. Status of Pending Court Challenges and What May Happen Next</a> (December 2024)</li> <li><a href="/en/perspectives/advisories/2025/04/ldts-are-not-devices-under-the-fdca">LDTs Are Not Devices Under the FDCA: Eastern District of Texas Vacates FDA Final Rule on LDTs</a> (April 2025)</li> </ul> <p>Please contact one of the authors of this Advisory or your regular Arnold &amp; Porter contact if you are interested in discussing strategies in this space. Among other topics, our team can assist you in assessing whether software components may independently implicate FDA&rsquo;s medical device authorities, conduct due diligence, evaluate reimbursement and market access considerations, and review materials to ensure claims are adequately supported and tailored based on the current enforcement environment.&nbsp; </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{F3A6F234-CED7-4108-8C71-84268F75DE0A}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/john-elwood-discusses-supreme-court-and-federal-appeals-court-decisions-in-law360John Elwood, head of Arnold &amp; Porter&rsquo;s Appellate and Supreme Court practice, was quoted in the <em>Law360</em> article, &ldquo;After Tense Terms, Hints Of High Court Harmony With Circuits,&rdquo; discussing signs of increasing alignment between the U.S. Supreme Court and the federal courts of appeals during the Court's latest term.Wed, 08 Jul 2026 00:00:00 -0500<p>John Elwood, head of Arnold &amp; Porter&rsquo;s Appellate and Supreme Court practice, was quoted in the <em>Law360</em> article, &ldquo;After Tense Terms, Hints Of High Court Harmony With Circuits,&rdquo; discussing signs of increasing alignment between the U.S. Supreme Court and the federal courts of appeals during the Court's latest term.</p> <p>Elwood observed that appellate courts issued fewer "outlier" decisions this term, noting that "there were definitely fewer outlier decisions, I would say, or fewer really red-letter decisions, where everybody in the legal community was talking about it the next day."</p> <p>He also explained that several of the Supreme Court's reversals reflected changes in the Court's own precedent rather than errors by the lower courts. "You can't fault the courts of appeals" in those situations, Elwood said. "They're doing their job if they apply existing law and leave it to the Supreme Court to overrule [its] own precedents."</p> <p><a href="https://www.law360.com/articles/2495020/after-tense-terms-hints-of-high-court-harmony-with-circuits">Read the full article</a> (subscription required).</p>{C11F3BB3-D4BA-42E7-84E1-9F61F837ED2E}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/law360-quotes-patrick-madden-on-third-circuit-flsa-gap-time-decisionPatrick Madden, a partner in the firm&rsquo;s Labor &amp; Employment group, was quoted in the <em>Law360</em> article, "5 Major Wage And Hour Rulings So Far In 2026," which examines several significant wage-and-hour decisions issued during the first half of 2026.Wed, 08 Jul 2026 00:00:00 -0500<p>Patrick Madden, a partner in the firm&rsquo;s Labor &amp; Employment group, was quoted in the <em>Law360</em> article, "5 Major Wage And Hour Rulings So Far In 2026," which examines several significant wage-and-hour decisions issued during the first half of 2026.</p> <p>Commenting on the Third Circuit's decision in <em>Secretary United States Department of Labor v. Comprehensive Healthcare Management Services LLC et al.</em>, Patrick discussed the court's precedential ruling that the Fair Labor Standards Act (FLSA) does not provide a remedy for unpaid straight-time, or "gap time," wages in workweeks where an employee's average hourly pay still exceeds the federal minimum wage. </p> <p>He noted that while the decision seeks to provide clarity on an issue that has been litigated for decades, it also raises questions that many federal courts have previously avoided addressing. Patrick observed that there is a split in the courts of appeals and the ruling "is directly addressing an issue that a lot of courts of appeals have specifically avoided," highlighting its potential for possible Supreme Court review and significance for future wage-and-hour litigation.</p> <p><a rel="noopener noreferrer" href="https://www.law360.com/employment-authority/articles/2494924?" target="_blank">Read the full article</a> (subscription required).</p>{A4DE7511-99C1-477B-ABFE-2670161127DA}https://www.arnoldporter.com/en/perspectives/publications/2026/07/antitrust-agency-insights-developments-at-the-us-antitrust-enforcement-agencies-second-quarter-2026matthew.tabas@arnoldporter.comSuccessfully navigating antitrust agency investigations requires a familiarity with Department of Justice and Federal Trade Commission processes, as well as insight into those agencies and their leaderships&rsquo; current priorities for enforcement and competition policy. This Newsletter will provide periodic updates on both, offering an analytical look at how the antitrust agencies are approaching important competition issues and what current investigations may mean for potential future enforcement. We hope our experience &mdash; both inside and outside these agencies &mdash; will provide insights that help you make more informed decisions for your business.Wed, 08 Jul 2026 00:00:00 -0500<h2>Letter From the Editors</h2> <p>Traditionally, the U.S. Federal Trade Commission (FTC or the Commission) and the Antitrust Division of the U.S. Department of Justice (DOJ or DOJ Antitrust) have used pre-litigation merger settlements to resolve challenged deals. Although such remedies fell out of favor during the Biden administration, FTC and DOJ leadership in both Trump administrations have accepted divestitures to resolve competitive concerns. In most instances, the agencies have decried behavioral remedies as ineffective relief to anticompetitive mergers and acquisitions. Recently, however, Associate Attorney General Stanley Woodward has reportedly told DOJ Antitrust to seek settlements[[N: Dana Mattioli, Dave Michaels &amp; Joe Palazzolo, <a rel="noopener noreferrer" href="https://www.wsj.com/politics/policy/top-doj-official-tells-staff-he-wants-to-avoid-antitrust-trials-bc5a23ce" target="_blank">Top DOJ Official Tells Staff He Wants to Avoid Antitrust Trials</a>, <em>Wall St. J.</em> (June 25, 2026).]] and the FTC has signaled a potential willingness to consider behavioral remedies in settlements.</p> <h3>Behavioral Remedies Under Both Trump Administrations Prior to 365 Retail Markets</h3> <p>Antitrust leadership during the first Trump administration was clear that behavioral remedies were disfavored. Former Assistant Attorney General (AAG) Makan Delrahim framed the issue in stark terms, emphasizing that &ldquo;antitrust is law enforcement, it&rsquo;s not regulation,&rdquo; and warning that &ldquo;behavioral remed[ies] supplant[] competition with regulation.&rdquo;[[N: Makan Delrahim, Assistant Att&rsquo;y Gen., U.S. Dep&rsquo;t of Justice, <a rel="noopener noreferrer" href="https://www.justice.gov/archives/opa/speech/file/1012086/dl" target="_blank">Keynote Address at the American Bar Association&rsquo;s Antitrust Fall Forum</a> (Nov. 16, 2018).]] He further explained that such remedies &ldquo;require centralized decisions instead of a free market process&rdquo; and &ldquo;set static rules devoid of the dynamic realities of the market.&rdquo; Similarly, Former FTC Chairman Joe Simons articulated a similar view, explaining that the Commission would accept behavioral remedies only in &ldquo;rare, very limited circumstances.&rdquo;[[N: <a rel="noopener noreferrer" href="https://www.mlex.com/mlex/articles/1951282/ftc-accepts-use-of-behavioral-remedies-in-rare-very-limited-circumstances-simons-says" target="_blank">FTC Accepts Use of Behavioral Remedies in Rare, Very Limited Circumstances, Simons Says</a>, <em>MLex</em> (June 20, 2018).]] Consistent with this approach, Chairman Simons identified defense industry transactions involving a single government customer as one of the few contexts in which behavioral remedies might be appropriate. Taken together, these statements reflect a consistent enforcement philosophy: behavioral remedies were disfavored because of their perceived administrability challenges, reliance on continued monitoring, and risk of distorting market incentives over time.</p> <p>Reflecting the narrow circumstances outlined by Chairman Simons, in 2018, the FTC accepted behavioral remedies in Northrop Grumman&rsquo;s vertical merger with Orbital ATK.[[N: Northrop Grumman Corp., 165 F.T.C. 1236, 1240 (2018) (decision and order).&nbsp;]] Northrop was &ldquo;one of four companies capable of supplying the U.S. government with missile systems,&rdquo; and Orbital was the largest supplier of Solid Rocket Motors (SRMs), which are an essential component for missile systems.[[N: Press Release, Fed. Trade Comm&rsquo;n, <a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2018/06/ftc-imposes-conditions-northrop-grummans-acquisition-solid-rocket-motor-supplier-orbital-atk-inc" target="_blank">FTC Imposes Conditions on Northrop Grumman&rsquo;s Acquisition of Solid Rocket Motor Supplier Orbital ATK, Inc.</a> (June 5, 2018).]] The settlement required Northrop to sell SRMs and related services to Northrop&rsquo;s three competitors in supplying the United States with missile systems and imposed a firewall, which separated Northrop&rsquo;s general operations from their SRM division. </p> <p>Antitrust leadership in the second Trump administration continued course, expressing preference for divestitures and discomfort with behavioral remedies. In his statement regarding the FTC&rsquo;s May 2025 settlement in Synopsys&rsquo; merger with Ansys, current FTC Chairman Andrew Ferguson articulated this viewpoint: </p> <p style="margin-left: 40px;">&ldquo;[T]he Trump FTC must be open to settling merger cases &hellip; but behavioral remedies should be treated with substantial caution. They are often difficult or impossible for the Commission to enforce effectively and can lock the Commission into the status of a monitor for individual firms rather than a guardian of competition across the entire economy&hellip;. [The Commission&rsquo;s] strong preference should be for structural remedies over conduct remedies.[[N: <a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/synopsys-ansys-ferguson-statement-joined-by-holyoak-meador.pdf" target="_blank">Statement of Chairman Andrew N. Ferguson Joined by Commissioner Melissa Holyoak and Commissioner Mark R. Meador</a>, In the Matter of Synopsys, Inc./Ansys, Inc., at 7-8 (Fed. Trade Comm&rsquo;n).]]</p> <p>Former Deputy Assistant Attorney General Bill Rinner made similar statements in June 2025. Speaking at George Washington University, Deputy Assistant Attorney General (DAAG) Rinner explained that under the Trump administration, &ldquo;[s]tructural remedies are preferred as an &ldquo;efficient default&rdquo; principle, primarily informed by their record of effectiveness compared to behavioral remedies.&rdquo;[[N: Bill Rinner, Deputy Assistant Att&rsquo;y Gen., U.S. Dep&rsquo;t of Justice, <a rel="noopener noreferrer" href="https://www.justice.gov/opa/speech/daag-bill-rinner-delivers-remarks-george-washington-university-competition-and" target="_blank">Remarks at the George Washington University Competition and Innovation Lab Conference Regarding Merger Review and Enforcement</a> (June 4, 2025).]] He added that there may be times when behavioral remedies offer &ldquo;necessary and adequate support&rdquo; to structural relief, but that this caveat &ldquo;is not an invitation to morph behavioral commitments into structural relief through costly legal alchemy.&rdquo;</p> <h3>Behavioral Remedy in the 365 Retail Markets/Cantaloupe Settlement</h3> <p>On May 1, 2026, however, the FTC announced a settlement in its investigation of 365 Retail Markets LLC&rsquo;s acquisition of Cantaloupe, Inc., which included a behavioral remedy.[[N: Providence Equity Partners L.L.C., FTC Matter No. 252-3161, at 8-9 (June 15, 2026) (<a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/PEPCantaloupe-FinalOrder.pdf" target="_blank">decision and order</a>).]] According to the FTC, 365 Retail is the nation&rsquo;s largest provider of micromarket kiosks &mdash; small, unattended markets that sell fresh produce found in offices. Cantaloupe owned point-of-sale software used by micromarket kiosks and Three Square Market &mdash; the second largest micromarket kiosk provider. The FTC alleged that the proposed acquisition would have eliminated competition in the micromarket kiosk market, and that 365 Retail could hinder software integration with competitors, driving up the cost of micromarket kiosks.[[N: Press Release, Fed. Trade Comm&rsquo;n, <a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/05/ftc-takes-action-protect-consumers-anticompetitive-effects-micromarket-kiosks-deal" target="_blank">FTC Takes Action to Protect Consumers from Anticompetitive Effects of Micromarket Kiosks Deal</a> (May 1, 2026).]] The FTC settlement resolved these concerns by requiring Cantaloupe to divest the Three Square Market business. The settlement also required the post-merger company to offer integrations between its software and hardware on fair and non-discriminatory terms to customers and third parties for a 10-year period, and appointed a monitor to ensure 365 Retail&rsquo;s compliance with the settlement.</p> <p>Prior to the 365 Retail/Cantaloupe settlement, the second Trump administration&rsquo;s FTC previously accepted a behavioral remedy in Omnicom Group&rsquo;s acquisition of the Interpublic Group of Companies, two leading advertising holding companies. However, the behavioral remedy addressed the Commission&rsquo;s concerns that advertising agencies, including Omnicom after its acquisition of Interpublic, coordinated on decisions not to advertise on particular platforms,[[N: Omnicom Grp. Inc., FTC Matter No. 251-0049 (Sept. 26, 2025) (<a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/2410059C4823OmnicomComplaint.pdf" target="_blank">complaint</a>).]] &ldquo;based on Political or ideological viewpoints.&rdquo;[[N: Omnicom Grp. Inc., FTC Matter No. 251-0049, at 8 (Sept. 26, 2025) (<a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/OmnicomOrder.pdf" target="_blank">decision and order</a>).]]</p> <p>In contrast, the behavioral component of the 365 Retail remedy imposes an affirmative, third-party licensing requirement on the combined company. In his statement concerning the 365 Retail settlement, FTC Commissioner Mark Meador reiterated the FTC&rsquo;s &ldquo;strong preference for clean divestitures of standalone business lines,&rdquo; but added that behavioral relief may nevertheless be appropriate when it is &ldquo;enforceable and designed to address the competitive concern at issue, or directly support[s] the effectiveness of the structural relief.&rdquo;[[N: <a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/meador-statement-providence-cantaloupe.pdf" target="_blank">Statement of Commissioner Mark R. Meador</a>, In the Matter of Providence Equity Partners L.L.C. and Cantaloupe, Inc., at 6-7 (Fed. Trade Comm&rsquo;n May 1, 2026).]] Commissioner Meador explained that here, 365 Retail could undermine the divestiture by restricting the purchaser of Three Square Market from using the necessary point-of-sale software at commercially reasonable prices. Thus, behavioral relief critically supported the long-term feasibility of spinning Three Square Market off of the combined 365 Retail and Cantaloupe. </p> <p>Immediately after the 365 Retail settlement, acting-Assistant Attorney General for Antitrust Omeed Assefi issued remarks slightly softening the DOJ&rsquo;s stance on behavioral remedies: &ldquo;In many cases, structural relief is more certain, effective, and cost-efficient than behavioral remedies,&rdquo; but that &ldquo;doesn&rsquo;t mean structural relief is always preferable to behavioral relief. Structural relief simply allows us to use a scalpel, fix the problem, and get out of the way.&rdquo;[[N: Omeed A. Assefi, Acting Assistant Att&rsquo;y Gen., U.S. Dep&rsquo;t of Justice, <a rel="noopener noreferrer" href="https://www.justice.gov/opa/speech/acting-assistant-attorney-general-omeed-assefi-delivers-remarks-engelberg-center" target="_blank">Remarks at the Engelberg Center on Innovation Law &amp; Policy at NYU School of Law</a> (May 7, 2026).]]</p> <h3>Takeaways</h3> <p>It remains to be seen whether the antitrust enforcement agencies will increasingly rely on behavioral remedies in merger settlements during the remainder of the second Trump administration. Nevertheless, the 365 Retail settlement shows a significant deviation from the Trump administration antitrust leadership&rsquo;s prior positions regarding using behavioral remedies as a tool to address competitive concerns in mergers. Going forward, parties subject to an agency investigation should consider whether tailored behavioral relief will be required to support a structural remedy, and how it can be structured in a way to preserve the deal value and assuage enforcer concerns about enforceability.</p> <p>The 365 Retail settlement has meaningful implications for parties navigating merger investigations under the second Trump administration. Structural remedies remain the starting point. The FTC and DOJ continue to express a clear preference for divestitures, reiterating that they lack the administrability issues present in behavioral remedies. Parties should continue to expect that any proposed remedy package will need to include a robust structural component.</p> <p>However, the agencies&rsquo; approach to behavioral remedies appears to be evolving in the current administration. Rather than rejecting them outright, the FTC has signaled a willingness to consider behavioral remedies, particularly where they are tightly scoped and directly support divestitures. Parties should consider whether conduct commitments can enhance the effectiveness of structural relief, especially in transactions involving vertical integration, digital platforms, or interoperability concerns. For example, non-discrimination obligations, access commitments, and interoperability requirements may be viable tools where they address specific risks of foreclosure or degradation.</p> <p>Finally, while the agencies&rsquo; openness may have increased, it remains bounded. The 365 Retail settlement does not signal a shift toward broad or open-ended behavioral regulation. Instead, it reflects a pragmatic recognition that, in certain cases, narrowly tailored conduct provisions may be necessary to ensure that structural remedies achieve their intended competitive outcomes.</p> <h3>FTC Cases and Proceedings</h3> <h4>FTC Seeks Public Comment on Petition to Modify Northrop Grumman Final Order</h4> <p>On April 2, 2026, the FTC sought public comment on Northrop Grumman&rsquo;s petition to reopen and set aside a final consent order involving Northrop Grumman&rsquo;s 2018 acquisition of aerospace and defense contractor Orbital ATK. The final consent order requires Northrop Grumman to supply solid rocket motors, or SRMs, to competitors on a non-discriminatory basis. Northrop Grumman contends that the order is no longer necessary to preserve competition. The public comment period closed on May 4, 2026.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/04/ftc-seeks-public-comment-petition-modify-northrop-grumman-final-order" target="_blank">Read the Press Release</a></li> </ul> <h4>FTC Orders Rollins, Inc. to Stop Enforcing Noncompete Agreements</h4> <p>On June 22, 2026, the FTC finalized its consent order with Rollins, Inc. The consent order requires that Rollins, a pest control company, cease enforcing non-compete agreements among its employees. The FTC alleged that the company&rsquo;s noncompete agreements prohibited employees from working in pest control within a predetermined distance, typically within a 75-mile radius from one of Rollins&rsquo; more than 700 locations in the U.S. The FTC also sent warning letters to other pest-control companies to review their employment agreements for potentially anticompetitive noncompete provisions.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/06/ftc-approves-final-consent-order-pest-control-noncompete-matter" target="_blank">Read the Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/251_0011_rollins_complaint.pdf" target="_blank">Read the Complaint</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/251_0011_rollins_do_public.pdf" target="_blank">Read the Consent Order</a></li> </ul> <h4>FTC Reaches Settlement With Advertising Companies WPP, Publicis, and Dentsu</h4> <p>On April 15, 2026, the FTC reached a settlement requiring the advertising companies to cease using common brand safety standards and to not restrict advertising based on politically motivated criteria.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/04/ftc-takes-action-restore-competition-digital-advertising-ecosystem" target="_blank">Read the Press Release</a><span></span></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/Dentsu-Complaint.pdf" target="_blank">Read the Complaint</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/Dentsu-StipulatedOrder.pdf" target="_blank">Read the Injunction (Dentsu)</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/WPP-Order.pdf" target="_blank">Read the Injunction (WPP Media)</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/Publicis-StipulatedOrder.pdf" target="_blank">Read the Injunction (Publicis)</a></li> </ul> <h4>FTC Reaches Settlement With U.S. Anesthesia Partners Inc. (USAP)</h4> <p>On April 23, 2026, the FTC settled pending litigation with USAP. The FTC had alleged that USAP engaged in unlawful monopolization in purchasing other Texas-based anesthesia providers. The terms of the settlement remain confidential to allow USAP to execute the settlement&rsquo;s obligations.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/04/ftc-charts-path-restore-competition-texas-anesthesia-markets-usap-litigation" target="_blank">Read the Press Release</a></li> </ul> <h4>FTC Finalizes Consent Order in Valvoline-Greenbriar Deal</h4> <p>On May 7, 2026, the FTC finalized a consent order resolving antitrust concerns related to a deal between Valvoline Inc. and private equity firm Greenbriar Equity Fund V., L.P. (Greenbriar). The consent order requires the divestiture of 45 quick-lube oil change shops to address antitrust concerns surrounding Valvoline&rsquo;s acquisition of approximately 200 quick-lube oil change outlets from Greenbriar. The FTC&rsquo;s complaint alleges that the acquisition would eliminate competition across 25 local markets where Valvoline and Oil Changers, a subsidiary of Greenbriar, directly compete in offering quick-lube oil changes. Under the terms of the FTC&rsquo;s final order, Main Street Auto LLC will acquire the divested outlets from Greenbriar and operate them under the name Oil Changers.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/05/ftc-finalizes-consent-order-valvoline-greenbriar-deal" target="_blank">Read the Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/Valvoline-FinalComplaint.pdf" target="_blank">Read the Complaint</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/Valvoline-FinalOrder.pdf" target="_blank">Read the Consent Order</a>&nbsp;</li> </ul> <h4>FTC Chair Andrew Ferguson Issues Warning Letter to Mortgage Connect</h4> <p>On May 8, 2026, FTC Chair Andrew Ferguson sent a warning letter to national mortgage services provider Mortgage Connect, urging the company to conduct a comprehensive review of its employment contracts, including any noncompete agreements, to ensure they comply with the law. The letter encourages Mortgage Connect to review and discontinue the use of any noncompete or other agreements that are not reasonably necessary and to notify relevant workers of their discontinuance.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/05/ftc-chairman-ferguson-issues-noncompete-warning-letter-mortgage-connect" target="_blank">Read the Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/legal-library/browse/warning-letters/mortgage-connect" target="_blank">Read the Letter</a></li> </ul> <h4>FTC Requires Divestiture of Ambulatory Surgery Centers in Ascension Health-AmSurg Deal</h4> <p>On June 2, 2026, the FTC announced that it would require Ascension Health Alliance (Ascension) to divest several surgery center facilities to complete its proposed $3.9 billion acquisition of AmSurg LLC. The divestiture covers each AmSurg facility in the relevant markets in which the FTC alleged that the proposed transaction would otherwise threaten competition: Nashville, Tenn.; Panama City, Fla.; Tulsa, Okla.; Waco, Texas; and Wichita, Kan. The FTC&rsquo;s proposed consent order settles allegations that Ascension&rsquo;s acquisition of AmSurg would limit competition for certain outpatient surgical services performed by gastroenterologists, ophthalmologists, and orthopedists across the Nashville, Panama City, Tulsa, Waco, and Wichita metro areas.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/06/ftc-requires-divestiture-ambulatory-surgery-centers-protect-patients-anticompetitive-effects" target="_blank">Read the Press Release</a>&nbsp;</li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/2510093ascensioncomplaint_0.pdf" target="_blank">Read the Complaint</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/2510093ascension_amsurgdecisionorder.pdf" target="_blank">Read the Consent Order</a></li> </ul> <h4>FTC Announces Dissolution of Diversity Lab LLC Following an FTC Investigation</h4> <p>On June 5, 2026, the FTC announced that Diversity Lab LLC permanently ceased operations following an FTC investigation. The FTC alleged that Mansfield Certification required law firms to certify that they considered candidate pools made up of at least 30% individuals with particular characteristics. The FTC&rsquo;s investigation sought information relevant to determining whether the Mansfield agreements were collusive in violation of Section 1 of the Sherman Act and Section 5 of the FTC Act.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/06/architect-law-firm-dei-programs-dissolves" target="_blank">Read the Press Release</a>&nbsp;</li> </ul> <h4>FTC Finalizes Consent Order in Sevita Health&rsquo;s Acquisition of BrightSpring Health Services</h4> <p>On June 10, 2026, the FTC finalized a consent order involving Sevita Health&rsquo;s acquisition of BrightSpring Health Services Inc.&rsquo;s community living business. The consent order requires Sevita to divest 128 intermediate care facilities (ICFs), which provide services to individuals with intellectual and developmental disabilities, and other assets such as day-training programs. The consent order requires Sevita to divest the facilities &mdash; located in Indiana, Louisiana, and Texas &mdash; to Dungarvin Group Inc., an experienced operator of ICFs. It also requires Sevita to assist Dungarvin in obtaining all licenses, permits, authorizations, or certifications related to, or necessary for, operating the divested facilities.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/06/ftc-finalizes-consent-order-sevita-brightspring-acquisition" target="_blank">Read the Press Release</a>&nbsp;</li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/Sevita-Complaint.pdf" target="_blank">Read the Complaint</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/2510060C4829SevitaFinalOrder.pdf" target="_blank">Read the Consent Order</a></li> </ul> <h4>FTC Finalizes Consent Order in 365 Retail Market LLC&rsquo;s Acquisition of Cantaloupe Inc.</h4> <p>On June 17, 2026, the FTC finalized a consent order involving 365 Retail Markets LLC&rsquo;s acquisition of Cantaloupe Inc. 365 Retail Markets was a provider of micromarket kiosks and Cantaloupe was a provider of micromarket kiosks and of point-of-sale software used in micromarket kiosks. The consent order settles FTC charges alleging that 365 Retail&rsquo;s initial proposed acquisition of Cantaloupe would have eliminated head-to-head competition, likely driving up the price for micromarket kiosks and related software and services. The consent order requires 365 Retail to divest Cantaloupe&rsquo;s micromarket kiosk business to Seaga Manufacturing Inc. The consent order also requires 365 Retail to provide its point-of-sale software to third-party competitors on non-discriminatory terms.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/06/ftc-approves-final-consent-order-micromarket-kiosks-deal" target="_blank">Read the Press Release&nbsp;</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/PEPCantaloupe-FinalComplaint.pdf" target="_blank">Read the Complaint</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/PEPCantaloupe-FinalOrder.pdf" target="_blank">Read the Consent Order</a></li> </ul> <h4>FTC Requires Aurobindo Pharma Ltd. to Divest Generic Drug Products to Complete its Acquisition of Lannett Company Inc.</h4> <p>On June 18, 2026, the FTC announced a proposed consent order, which would resolve its antitrust concerns in Aurobindo Pharma Ltd.&rsquo;s acquisition of Lannett Company Inc. The FTC alleged that the acquisition would limit competition in the markets for four generic drugs. The proposed consent order requires that Aurobindo divest the four generic products to Quagen Pharmaceuticals LLC. The four generic products to be divested under the consent order are:</p> <ul> <li><em>Mycophenolate mofetil oral suspension</em> &mdash; an immunosuppressant prescribed to help prevent organ transplant rejection.</li> <li><em>Niacin extended release tablets</em> &mdash; a drug used to manage cholesterol levels and to prevent or manage niacin, a B-complex vitamin, deficiency.</li> <li><em>Pilocarpine tablets</em> &mdash; a drug used to treat dry mouth, often after radiation therapy for head and neck cancer or in patients with Sj&ouml;gren&rsquo;s syndrome, which is an autoimmune disease causing the immune system to attack moisture-producing glands.</li> <li><em>Rabeprazole sodium delayed release tablets</em> &mdash; a proton pump inhibitor used to reduce stomach acid and indicated for the treatment of duodenal ulcers, gastroesophageal reflux disease, and Zollinger-Ellison syndrome, a condition where the stomach produces too much acid.</li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/06/ftc-takes-action-protect-americans-higher-drug-costs-aurobindo-lannett-deal" target="_blank">Read the Press Release&nbsp;</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/AurobindoComplaint.pdf" target="_blank">Read the Complaint</a><span></span></li> <li><span><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/Aurobindo-DecisionandOrder.pdf" target="_blank"></a></span><a href="https://www.ftc.gov/system/files/ftc_gov/pdf/Aurobindo-DecisionandOrder.pdf" target="_blank">Read the Consent Order</a></li> </ul> <h4>FTC Files Amicus Brief in <em>CareFirst of Maryland v. Johnson &amp; Johnson</em></h4> <p>On June 23, 2026, the FTC filed an amicus brief in an antitrust case before the United States Court of Appeals for the Fourth Circuit alleging that drug manufacturer Johnson &amp; Johnson illegally maintained a monopoly through anticompetitive conduct. In the brief, the FTC urges that the Fourth Circuit reverse the district court and find that the district court erred in requiring willfulness to find monopolization liability.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/06/ftc-files-amicus-brief-protect-consumers-pharmaceutical-monopolies" target="_blank">Read the Press Release</a>&nbsp;</li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/CareFirstvJandJAmicusFINAL.pdf" target="_blank">Read the Amicus Brief</a></li> </ul> <h3>DOJ Cases and Proceedings</h3> <h4>DOJ Secures Guilty Plea From Former Air Force Member in Bid Rigging Schemes</h4> <p>On April 2, 2026, the DOJ Antitrust Division secured a guilty plea from Alan Hayward James, a former active-duty Master Sergeant of the U.S. Air Force. James pleaded guilty to conspiracy to commit bribery, wire fraud, and conspiracy to rig bids. He admitted to inflating the cost of information technology contracts by a total of $37 million and distributing the surplus to himself and co-conspirators.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/former-member-air-force-pleads-guilty-multi-year-bid-rigging-schemes-and-conspiracy-defraud" target="_blank">Read the Press Release</a></li> </ul> <h4>DOJ Secures Prison Sentence From Defendant for Defrauding U.S. Military in Contract Bid Scam</h4> <p>On April 8, 2026, the DOJ Antitrust Division, working with the U.S. Attorney&rsquo;s Office for the Southern District of Florida, secured a five-year prison sentence from the district judge in the sentencing of a defendant, Jasen Butler, convicted of defrauding the U.S. military in contract bid scams. The defendant, owner of Independent Marine Oil Services LLC, submitted fraudulent invoices to warships, receiving approximately $4.5 million in payments.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/fuel-executive-gets-five-year-prison-sentence-defrauding-us-military-contract-bid-scam" target="_blank">Read the Press Release&nbsp;</a></li> </ul> <h4>DOJ Files Statement of Interest in California Fire Insurance Case </h4> <p>On May 4, 2026, the DOJ filed a statement of interest in <em>Ferrier v. State Farm Fire and Casualty Company</em>, which is pending in the state Superior Court of Los Angeles County, California. This case was brought under California state antitrust law by 60 homeowners who lost their homes in the wildfires that occurred in southern California in January 2025. The homeowners allege that the defendants, 16 homeowner insurance companies, engaged in a group boycott by jointly conspiring to cancel the homeowners&rsquo; fire insurance policies in the years leading up to the January 2025 fires. As a result, the homeowners claim, they were forced to obtain insurance from a state-run program that offers less protective coverage, resulting in higher out-of-pocket expenses for rebuilding their homes. The defendant insurers moved to dismiss the case, asserting that, under the <em>Noerr-Pennington</em> doctrine, they are exempt from antitrust liability under both federal and California antitrust laws that protect petitioning and advocacy directed at government agencies. The statement of interest argues that the <em>Noerr-Pennington</em> doctrine should not apply to the insurers&rsquo; alleged group boycott of the homeowner policyholders, as the alleged boycott was separate and distinct from any government petitioning activity by the insurers.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-files-statement-interest-california-fire-insurance-case" target="_blank">Read the Press Release</a>&nbsp;</li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/media/1439391/dl" target="_blank">Read the Statement of Interest</a></li> </ul> <h4>DOJ Announces Settlement With Agri Stats to Resolve Information Sharing Allegations </h4> <p>On May 7, 2026, the DOJ, along with several states, reached a proposed settlement with Agri Stats, Inc., to resolve allegations that Agri Stats&rsquo; meat industry reports amounted to an impermissible exchange of information among competitors aimed at facilitating price fixing. Agri Stats is a data-sharing and consulting company engaged in the collection of prices, output, and costs from growers and processors in the broiler chicken, turkey, and pork industries. The settlement imposes a number of conduct restrictions on what data Agri Stats may collect and report, how that data must be aggregated and aged before it can be shared, who may purchase its reports and on what terms, and how compliance with all of these obligations will be monitored and enforced going forward.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-requires-agri-stats-end-exchange-competitively-sensitive-information" target="_blank">Read the Press Release</a></li> <li><a href="/en/perspectives/advisories/2026/05/agri-stats-settlement">Read Arnold &amp; Porter&rsquo;s Advisory</a></li> </ul> <h4>DOJ Files Statement of Interest in <em>Corteva Agriscience LLC. v. Inari Agriculture Inc</em> </h4> <p>On May 11, 2026, the DOJ filed a statement of interest in <em>Corteva Agriscience LLC, et al. v. Inari Agriculture Inc. et al.</em> in the U.S. District Court for the District of Delaware. In the dispute, the plaintiff, Corteva, a large commercial seed and plant producer, sued Inari, a recent entry into the seed market, for patent infringement. As required by the Patent Act to receive valid patents for its seeds, Corteva deposited samples of its seeds to the American Type Culture Collection seed depository. Corteva alleged that Inari used this information to unlawfully recreate and iterate on Corteva&rsquo;s seeds. The DOJ&rsquo;s statement of interest takes the position that the Patent Act requires the publication of patented information, including the deposit of seeds, that accessing that information is permissible, and that seed deposits exist in part to allow for other companies to iterate and to innovate on patented seeds.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-files-statement-interest-highlighting-importance-enabling-competition-and" target="_blank">Read the Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1440271/dl?inline" target="_blank">Read the Statement of Interest</a></li> </ul> <h4>DOJ Indicts Chinese Shipping Container Manufacturers and Executives in Price Fixing Conspiracy</h4> <p>On May 19, 2026, the DOJ announced that it had indicted four international shipping container manufacturers and seven of their executives for conspiring to restrict the output and fix the prices of standard unrefrigerated shipping containers. According to the indictment, the conspirators agreed to limit the number of shifts and hours that each production line for standard dry containers could run per day; install video surveillance to ensure all conspirators complied with the agreed-upon limitations; refrain from building new container factories; and establish a fund and mechanism to financially penalize any conspirator that violated their agreement. One executive, Vick Nam Hing Ma, was arrested in France, and his extradition to the United States is pending. The remaining six executives have not been arrested.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/four-worlds-largest-container-manufacturing-companies-and-seven-their-executives-indicted" target="_blank">Read the Press Release</a></li> </ul> <h4>DOJ Arrests Defense Contractors for Bribery and Fraud Conspiracy </h4> <p>On May 20, 2026, the DOJ announced criminal charges against two defendants, Leonard Pick and Brian Kent, for bribery, major fraud against the United States, and conspiracy to commit bribery and major fraud. The indictment alleges that the defendants conspired to bribe a U.S. Army employee with approximately $1.25 million over five years and fraudulently inflated government contracting costs to include the U.S. Army employee&rsquo;s bribe payments. The indictment further alleges that, from approximately September 2020, up to and including October 2022, defendant Kent further defrauded the government by inflating government contract costs to include approximately $680,000 in payments intended for and sent to Kent&rsquo;s personal consulting business.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/two-defense-contractors-arrested-bribery-and-major-fraud-conspiracy-scheme-affecting" target="_blank">Read the Press Release</a></li> </ul> <h4>DOJ Announces Commitment From Bayer to Modify Seed Loyalty Program</h4> <p>On May 20, 2026, the DOJ announced that Bayer CropScience LLC committed to maintaining changes it had previously made to its &ldquo;Premier Performance Program&rdquo; loyalty program. First, Bayer&rsquo;s Premier Performance Program previously required independent seed companies to meet sales targets for both corn and soybean to achieve discounts under its loyalty program. Bayer committed to not reinstate the requirement for seven years. Second, the Premier Performance Program formerly included incentives that DOJ asserted could limit independent seed companies&rsquo; willingness to license technology from Bayer&rsquo;s competitors. In response to DOJ&rsquo;s concerns, Bayer has committed to not reinstate these incentives, or any substantially similar incentive program, for seven years.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/antitrust-division-secures-seed-tying-and-loyalty-program-commitments-bayer" target="_blank">Read the Press Release</a></li> </ul> <h4>DOJ Requires Taiheiyo Cement Corporation and CalPortland Company to Divest Assets in Acquisition of Ready-Mix Concrete Assets From Vulcan Materials Company</h4> <p>On May 21, 2026, the DOJ announced a proposed settlement with Taiheiyo Cement Corporation and its subsidiary CalPortland Company to divest three ready-mix concrete plants along with related assets to address antitrust concerns arising from CalPortland&rsquo;s proposed $712 million acquisition of ready-mix concrete assets from Vulcan Materials Company. The proposed settlement resolves concerns that the transaction would likely cause higher prices, lower quality, and less favorable terms for buyers of ready-mix concrete in San Diego County, where it is used in home construction, commercial construction, and infrastructure projects.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-requires-taiheiyo-cement-corporation-and-calportland-company-divest" target="_blank">Read the Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/d9/2026-05/26-1783_us_v_taiheiyo_complaint.pdf" target="_blank">Read the Complaint</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/d9/2026-05/26-1783_us_v_taiheiyo_proposed_final_judgment.pdf" target="_blank">Read the Proposed Settlement</a></li> </ul> <h4>DOJ Secures Guilty Plea in Healthcare-Related Bid Rigging Case</h4> <p>On June 2, 2026, the DOJ announced that it secured a guilty plea in its case against defendant Scott Srodes for rigging bids in the sale of shelving and storage products to the U.S. Air Force to service multiple healthcare and operations facilities. The defendant admitted to submitting collusive bids for multiple projects at healthcare facilities. According to the guilty plea, he and his co-conspirators exchanged pricing information prior to submitting them, at times instructing each other exactly what price to quote for certain projects. The guilty plea was the second in the DOJ&rsquo;s ongoing investigation into bid rigging and fraud impacting U.S. military facilities.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/nevada-man-pleads-guilty-rigging-bids-healthcare-related-and-other-air-force-projects" target="_blank">Read the Press Release</a></li> </ul> <h4>DOJ Issues Statement in Connection With the Closing of its Investigation of the Proposed Acquisition of Warner Bros. Discovery by Paramount Skydance</h4> <p>On June 12, 2026, the DOJ issued a statement in connection with the closing of its investigation of the proposed acquisition of Warner Bros. Discovery by Paramount Skydance. The DOJ stated that it does not intend to challenge the transaction as it is not likely to result in harm to competition, including with respect to: (1) streaming video on demand; (2) linear television; and (3) studio development, production, or distribution of films for theatrical release. The DOJ described these markets as highly dynamic and stated that the transaction&rsquo;s impact would be to increase competition across the media and entertainment ecosystem. </p> <p>Regarding streaming video on demand, the DOJ noted that the acquisition was likely to increase competition because it would allow the post-merger company to more effectively coordinate its current offerings of Paramount+, discovery+, and HBO Max to compete with Netflix and the other largest streaming services. Regarding linear television, the DOJ concluded that the acquisition did not threaten competition because linear television already faces significant competition from streaming services for live programming such as sports rights and news. Regarding studio development, the DOJ concluded that non-legacy studios, including NEON, A24, and Blumhouse, demonstrate that the film development industry is dynamic, thus adequately incentivizing the post-acquisition company to continue to generate new content. </p> <p>Several State Attorneys General continue to have active investigations into the proposed acquisition under state and federal antitrust laws.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/statement-department-justice-antitrust-division-closing-its-investigation-merger-paramount" target="_blank">Read the Statement</a>&nbsp;</li> </ul> <h4>DOJ Secures Guilty Plea From Intelligence Community Contractor</h4> <p>On June 12, 2026, the DOJ announced that it secured the guilty plea of defendant David Duggin, a former intelligence community contractor, accused of soliciting and accepting illegal kickbacks. According to the guilty plea, the defendant and his co-conspirators used the defendant&rsquo;s on-site access to sensitive information at an intelligence agency to illegally obtain government contracts for millions of dollars of hardware and software.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/former-intelligence-community-contractor-pleads-guilty-accepting-kickbacks" target="_blank">Read the Press Release</a></li> </ul> <h4>DOJ Requires OhioHealth to Stop Using Healthcare Contract Terms That Raise Costs for Ohio Patients</h4> <p>On June 16, 2026, the DOJ announced a proposed settlement with OhioHealth Corporation, resolving its pending civil litigation. The DOJ alleged that OhioHealth used its market power to enact contractual restrictions that encumber or fully preclude insurers from offering budget-conscious health insurance plans or plan features. The proposed settlement seeks to void OhioHealth&rsquo;s existing contract provisions that prohibit or deter insurers from offering innovative and budget-conscious health insurance plans or plan features and prevent OhioHealth from seeking or obtaining such contract provisions in the future and from penalizing health insurers offering budget-conscious health insurance plans. The proposed settlement would also appoint a compliance monitor to ensure compliance with the settlement&rsquo;s conditions.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-requires-ohiohealth-stop-using-anticompetitive-healthcare-contract-terms" target="_blank">Read the Press Release</a>&nbsp;</li> </ul> <h4>Supreme Court Issues Ruling in <em>Trump v. Slaughter</em>, Allowing the President to Remove FTC Commissioners </h4> <p>On June 29, 2026, the Supreme Court issued its ruling in <em>Trump v. Slaughter</em>, allowing President Trump to remove Former Commissioner Slaughter from her position as FTC commissioner and invalidating the statutory protections from removal for FTC commissioners. On March 18, 2025, President Trump ordered the dismissal of Democratic FTC commissioners Alvaro Bedoya and Rebecca Slaughter. Former Commissioner Slaughter sued in federal court in the District of Columbia, where she obtained an injunction on summary judgment ordering her reinstatement. The Supreme Court issued a stay of the injunction in September, before hearing oral arguments and ultimately allowing President Trump to remove Former Commissioner Slaughter. The Court held that statutory removal protections for executive officers violate the separation of powers, which requires the president to have the unfettered authority to remove executive officers from their positions at will.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.supremecourt.gov/opinions/25pdf/25-332_qn12.pdf" target="_blank">Read the Decision</a></li> </ul> <h4>DOJ Announces Proposed Settlement With Egg Producers </h4> <p>On June 30, 2026, the DOJ announced proposed settlements in its case against Cal-Maine Foods Inc., Hickman&rsquo;s Egg Ranch Inc., and Centrum Valley Holdings LLC. According to the DOJ, the defendants coordinated on egg spot market bidding decisions with the goal of raising daily price quotations for eggs. The proposed settlement prohibits the defendants from communicating with competitors regarding bidding prices or strategies.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/justice-department-requires-egg-producers-end-coordinated-benchmark-manipulation" target="_blank">Read the Press Release</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1450281/dl?inline" target="_blank">Read the Complaint&nbsp;</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1450301/dl?inline" target="_blank">Read the Proposed Final Judgment (Cal-Maine)</a></li> <li><a rel="noopener noreferrer" href="https://www.justice.gov/atr/media/1450291/dl?inline" target="_blank">Read the Stipulation and Order (Cal-Maine)&nbsp;</a></li> </ul> <h3>FTC Policy</h3> <h4>FTC Supports Proposed Repeal of Certificate of Need Requirements</h4> <p>On April 2, 2026, the FTC released a letter of advocacy to Tennessee legislators, urging them not to repeal a Certificate of Public Advantage (COPA) that provides state regulatory oversight for Ballad Health. In it, they took the position that repealing the COPA in the absence of a competing healthcare system would enable a monopolist to exercise substantial market power unconstrained by state regulatory oversight.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/04/ftc-staff-warn-tennessee-legislature-risks-patients-if-ballad-health-copa-expires-support-proposed" target="_blank">Read the Press Release</a></li> </ul> <h3>DOJ Policy</h3> <h4>DOJ Approves Department of Energy Defense Production Act Consortium&rsquo;s Updated Voluntary Agreement </h4> <p>On April 23, 2026, the DOJ approved the U.S. Department of Energy Defense Production Act Consortium&rsquo;s Updated Voluntary Agreement. The agreement authorizes industry to enter into agreements necessary to meet national defense requirements. There is a limited antitrust defense available for actions taken to develop or carry out these approved agreements.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/antitrust-division-approves-department-energy-defense-production-act-consortiums-updated" target="_blank">Read the Press Release</a>&nbsp;</li> </ul> <h3>Interagency Initiatives</h3> <h4>DOJ and FTC Extend Deadline for Public Comment on Guidance on Business Collaborations</h4> <p>On April 17, 2026, the DOJ and FTC extended the comment period deadline for their inquiry on consideration of guidance on collaborations among competitors from April 24, 2026 to May 21, 2026.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/doj-and-ftc-extend-deadline-public-comment-guidance-business-collaborations" target="_blank">Read the Press Release</a></li> </ul> <h4>FTC and DOJ Oppose ABA Law School Accreditation </h4> <p>On May 1, 2026, the FTC and DOJ released a letter, joined by the U.S. Attorney for the Middle District of Tennessee, urging the Tennessee Supreme Court to reduce its reliance on the American Bar Association (ABA) in determining which law schools provide sufficient education for their graduates to take the Tennessee bar examination. The FTC and DOJ took the position that solely allowing the ABA to handle accreditation drives up the cost of legal education, thereby limiting the supply of lawyers.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/news-events/news/press-releases/2026/05/ftc-urges-tennessee-supreme-court-oppose-abas-law-school-accreditation-monopoly" target="_blank">Read the FTC Press Release&nbsp;</a></li> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/legal-library/browse/advocacy-filings/ftc-doj-comment-letter-supreme-court-tennessee-regarding-potential-regulatory-reforms-increase" target="_blank">Read the Letter</a></li> </ul> <h3>FTC Speeches and Statements</h3> <h4>Chief of Staff and Attorney Advisor for Competition to Commissioner Meador Daniel Graulich Delivers Remarks at the Informa Connect Antitrust West Coast Conference </h4> <p>On May 14, 2026, Daniel Graulich, Chief of Staff and Attorney Advisor for Competition to FTC Commissioner Meador, delivered a keynote address at the Informa Connect Antitrust West Coast Conference about a &ldquo;functional approach&rdquo; to antitrust enforcement and compliance. Graulich also drew a close parallel between the work of compliance teams and enforcement officials, arguing that both are fundamentally concerned with understanding the intent motivating business strategy through a holistic, fact-driven approach, and closed with four practical takeaways: that antitrust risk concentrates where market position, relationships, and strategic objectives intersect; that antitrust analysis looks to substance over form; that conduct is not evaluated in isolation but as part of an overall course of dealing; and that a contextual approach anchored in ordinary-course business documents is more effective for both compliance and enforcement.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/Daniel-Graulich-Informa-Keynote-Address.pdf" target="_blank">Read the Speech</a></li> </ul> <h4>Commissioner Mark Meador Delivers Remarks Regarding Procedural Integrity in the Merger Review Process</h4> <p>On May 20, 2026, FTC Commissioner Mark Meador spoke at an FTC Bureau of Competition event about litigating the fix and the importance of procedural integrity in the merger review process. Meador argued that the prior administration&rsquo;s deliberate policy of refusing to engage on remedies during the Hart-Scott-Rodino Act (HSR Act) review period produced damaging consequences: investigations became more drawn out, parties were incentivized to withhold remedy proposals for litigation, and agencies found themselves litigating transactions that had already been modified, without the investigative tools or time needed to evaluate the new terms. He traced the HSR Act&rsquo;s origins to Congress&rsquo; recognition that post-hoc merger challenges were too resource-intensive to effectively prevent anticompetitive harm, and argued that the premerger review process exists to allow remedies to be designed on a complete record before consummation.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/meador-litigate-the-fix.pdf" target="_blank">Read the Speech</a></li> </ul> <h4>Commissioner Mark Meador Delivers Remarks Regarding the Role of Economics in Antitrust Adjudication </h4> <p>On June 11, 2026, FTC Commissioner Mark Meador delivered remarks on the role economics should play in antitrust adjudication. Meador argued that while economics is indispensable to antitrust, it is not a substitute for legal analysis or real-world evidence, and that theory does not displace facts, especially when models are constructed post hoc to support a litigation position. He identified three recurring judicial errors: first, the rote application of economic propositions from cases like <em>Verizon v. Trinko</em> as categorical rules untethered from case-specific facts, which he called &ldquo;Trinko creep&rdquo;; second, courts give excessive weight to technical econometric models while discounting ordinary-course documents and intent evidence that more directly reveal what conduct was designed to achieve; and third, an excessive fixation on price and output metrics that can allow facially coercive conduct such as systematic deception or conditional dealing.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.ftc.gov/system/files/ftc_gov/pdf/The-Role-of-Economics-in-Antitrust-Adjudication-Meador.pdf" target="_blank">Read the Speech</a></li> </ul> <h3>DOJ Speeches and Statements</h3> <h4>DAAG Beller Delivers Remarks at NAB Show Las Vegas</h4> <p>On April 20, 2026, DAAG Charlie Beller of the Antitrust Division spoke at the NAB Show in Las Vegas about federal antitrust enforcement in the evolving media landscape. He framed his remarks around two themes: first, that the DOJ&rsquo;s enforcement priorities are rooted in federal interests and are designed to complement, not replace, state, private, and regulatory enforcement; and second, that technological change, including artificial intelligence (AI), requires cautious humility rather than reflexive action. On the media landscape, Beller noted that the competitive baseline for content distribution has changed fundamentally, with consumers now able to access content through broadcast, cable, satellite, streaming, and social media, and cautioned that increased choice does not eliminate the possibility of market power. On AI, Beller drew a parallel to the internet in its early years, noting that it expands tools available to creators and lowers barriers, but stressed that it is not a catch-all defense to competitive concerns and that assertions about future AI-driven competition must be grounded in evidence.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/speech/deputy-assistant-attorney-general-g-charles-beller-delivers-remarks-nab-show-las-vegas" target="_blank">Read the Speech</a></li> </ul> <h4>Acting AAG Assefi Delivers Remarks at Engelberg Center on Innovation Law &amp; Policy at NYU School of Law</h4> <p>On May 7, 2026, Acting AAG Omeed Assefi spoke at the Engelberg Center on Innovation Law &amp; Policy at New York University (NYU) School of Law about the Antitrust Division&rsquo;s approach to merger enforcement. Assefi emphasized that the Antitrust Division&rsquo;s approach is built on transparency, practicality, and precision, and noted that only 1% of HSR Act-reviewed mergers go to Second Request and the vast majority proceed without challenge. He outlined the Antitrust Division&rsquo;s preference for structural remedies, citing three recent consent decrees, Constellation/Calpine, CMCO/Kito Crosby, and Reddy Ice/Arctic Glacier, as examples of targeted divestitures that resolved competitive concerns. Assefi also stressed the Antitrust Division&rsquo;s willingness to litigate when necessary, pointing to past enforcement failures such as the Live Nation/Ticketmaster and Google/DoubleClick mergers as cautionary examples, and emphasized that transparent engagement from merging parties is expected throughout the review process.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/speech/acting-assistant-attorney-general-omeed-assefi-delivers-remarks-engelberg-center" target="_blank">Read the Speech</a></li> </ul> <h4>Acting DAAG for Criminal Enforcement Daniel Glad Delivers Remarks at the Antitrust West Coast Conference</h4> <p>On May 14, 2026, Acting DAAG for Criminal Enforcement Daniel Glad spoke at the Antitrust West Coast Conference in San Francisco about algorithmic collusion and criminal antitrust enforcement. Glad argued that software does not change the rule against collusion and that algorithmic tools cannot launder anticompetitive conduct, using the RealPage consent judgment, which required the company to stop using real-time competitor pricing data, as an illustration of how civil remedies target the specific mechanics of coordination rather than banning algorithmic pricing outright. He described how the Antitrust Division&rsquo;s existing investigative architecture, including the Procurement Collusion Strike Force and the new Whistleblower Rewards Program (which recently issued its first-ever $1 million payment), is well-suited to detecting algorithmic cartel conduct because automated systems leave an even more extensive digital trail than traditional conspiracies. Glad also previewed three open questions the Antitrust Division is actively analyzing regarding AI-driven pricing: what constitutes an actionable agreement when pricing is mediated by a model, where criminal intent lies when humans delegate pricing decisions to AI, and whether the per se rule applies to large language model-generated pricing arrangements.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/speech/acting-deputy-assistant-attorney-general-criminal-enforcement-daniel-gladd-delivers" target="_blank">Read the Speech</a></li> </ul> <h4>DAAG Nicole Sarrine Delivers Remarks at the Transparency Rising 2026 National Forum</h4> <p>On May 19, 2026, DAAG Nicole Sarrine spoke at the Transparency Rising 2026 National Forum in New Orleans about the Antitrust Division&rsquo;s healthcare enforcement priorities. Sarrine described healthcare as a top enforcement priority given rising costs for consumers, employers, and government programs, and highlighted two recent cases challenging anticompetitive contracting practices by OhioHealth and NewYork-Presbyterian, which she argued use contract restrictions to prevent insurers from offering lower-cost health plan options. She also discussed the Antitrust Division&rsquo;s December 2025 settlement resolving competitive concerns in UnitedHealth&rsquo;s acquisition of Amedisys and the Antitrust Division&rsquo;s monitoring of pharmacy benefit manager markets.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/speech/deputy-assistant-attorney-general-nicole-sarrine-delivers-remarks-transparency-rising" target="_blank">Read the Speech</a></li> </ul> <h4>DAAG Nicole Sarrine Delivers Remarks at R-CALF USA 2026 Annual National Convention</h4> <p>On June 17, 2026, DAAG Nicole Sarrine spoke at the R-CALF USA 2026 Annual National Convention in Rapid City, South Dakota about &ldquo;America First&rdquo; antitrust enforcement in agricultural markets. Sarrine highlighted the Antitrust Division&rsquo;s enforcement action against Agri Stats, which she described as a decades-long scheme through which major chicken, turkey, and pork processors shared confidential pricing data with each other, driving up food prices for consumers. On beef markets specifically, Sarrine confirmed that the DOJ&rsquo;s investigation of the &ldquo;Big Four&rdquo; meatpackers is underway, and encouraged ranchers and cattlemen with relevant information to contact the Antitrust Division directly.</p> <ul> <li><a rel="noopener noreferrer" href="https://www.justice.gov/opa/speech/deputy-assistant-attorney-general-nicole-sarrine-delivers-remarks-r-calf-usa-2026-annual" target="_blank">Read the Speech</a></li> </ul> <p><span style="font-size: small;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{FDB767F4-8964-4EDA-973D-C24EABEFC0C8}https://www.arnoldporter.com/en/perspectives/publications/2026/07/generative-ai-is-reshaping-the-defense-of-complex-litigationDavid A. Kerschnerhttps://www.arnoldporter.com/en/people/k/kerschner-david-adavid.kerschner@arnoldporter.comMelissa Webermanhttps://www.arnoldporter.com/en/people/w/weberman-melissamelissa.weberman@arnoldporter.comAngela M. Pelletierhttps://www.arnoldporter.com/en/people/p/pelletier-angela-mangela.pelletier@arnoldporter.comDefending against a lawsuit is expensive, document-intensive and increasingly complex. For in-house legal teams managing outside counsel and overseeing large-scale litigation &mdash; including multidistrict litigation and mass torts &mdash; the pressure to control costs while maintaining quality is constant.Wed, 08 Jul 2026 00:00:00 -0500<span>Defending against a lawsuit is expensive, document-intensive and increasingly complex. For in-house legal teams managing outside counsel and overseeing large-scale litigation &mdash; including multidistrict litigation and mass torts &mdash; the pressure to control costs while maintaining quality is constant. Generative AI is rapidly changing that calculus. Across the full lifecycle of a case, from early research and drafting through expert battles and trial preparation, AI tools are helping defense teams work faster, smarter, and more consistently. This article surveys three areas where these tools are making the greatest difference: legal research and drafting, fact witness development, and expert witness strategy. The tools and strategies discussed here don't work as a replacement for sophisticated counsel, but can be used to increase counsel's efficiency, freeing up bandwidth for more complex, strategic decision-making.</span>{78A90157-1C72-4AEA-89C3-4508F002374C}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/law360-interviews-ron-lee-on-ndaa-implications-for-government-contractorsRon Lee, senior counsel in Arnold &amp; Porter&rsquo;s Government Contracts and National Security practices, was recently quoted in the<em> Law360</em> article, &ldquo;New Chinese Lobbying Law Raises Q&rsquo;s For DOD Contractors,&rdquo; covering how defense contractors are navigating implementation of a provision of the National Defense Authorization Act for Fiscal Year 2025 that prohibits the Secretary of Defense from contracting with companies that contract with a firm that provides lobbying activities for companies on the Department of Defense&rsquo;s list of Chinese military companies operating in the United States.Tue, 07 Jul 2026 00:00:00 -0500<p>Ron Lee, senior counsel in Arnold &amp; Porter&rsquo;s Government Contracts and National Security practices, was recently quoted in the <em>Law360</em> article, &ldquo;New Chinese Lobbying Law Raises Q&rsquo;s For DOD Contractors,&rdquo; covering how defense contractors are navigating implementation of a provision of the National Defense Authorization Act for Fiscal Year 2025 that prohibits the Secretary of Defense from contracting with companies that contract with a firm that provides lobbying activities for companies on the Department of Defense&rsquo;s list of Chinese military companies operating in the United States.</p> <p>Ron highlighted that, because of the NDAA&rsquo;s broad definition of lobby activities, the law inevitably affects a very wide range of defense contractors. </p> <p>&ldquo;I can&rsquo;t think of any group of DOD contractors that could just confidently say, well, we don&rsquo;t really need to worry about this, because we know exactly who all the other clients and activities of all the entities that you contract with,&rdquo; Ron said. &ldquo;So, it&rsquo;s something that I think is and probably should be occupying the attention of pretty much the entire DOD contracting community.&rdquo; </p> <p>He also emphasized that the process of ensuring contracts comply with the law will be ongoing, as DOD continues to update its 1260H list with additional covered companies. </p> <p>&ldquo;[Defense contractors] have to look at all their other business partners, the people that they&rsquo;re contracting with ... the law firms, the consulting firms, the lobbying firm, and so on, and those firms&rsquo; customers [and] clients could be changing all the time,&rdquo; Ron said. &ldquo;So, the point I&rsquo;m trying to make here is that it&rsquo;s a very much dynamic and constantly changing situation.&rdquo; </p> <p><a rel="noopener noreferrer" href="https://www.law360.com/articles/2496855/new-chinese-lobbying-law-raises-q-s-for-dod-contractors-" target="_blank">Read the full article</a> (subscription required).</p>{F4E20F71-FFBE-4751-AAC6-0C9DC4FF9160}https://www.arnoldporter.com/en/perspectives/news/2026/07/prominent-tech-litigator-sunita-bali-joins-arnold-porter-in-san-francisco<strong>SAN FRANCISCO, July 7, 2026</strong> &mdash; Arnold &amp; Porter announced today that Sunita Bali has joined the firm&rsquo;s Complex Litigation practice as a partner. Sunita will be resident in the firm&rsquo;s San Francisco office.Tue, 07 Jul 2026 00:00:00 -0500<p><strong>SAN FRANCISCO, July 7, 2026 </strong>&mdash; Arnold &amp; Porter announced today that Sunita Bali has joined the firm&rsquo;s Complex Litigation practice as a partner. Sunita will be resident in the firm&rsquo;s San Francisco office. Her arrival builds on the firm&rsquo;s ongoing West Coast strategic growth and follows several other additions in Los Angeles, San Francisco, and Seattle this year.</p> <p>Ken Chernof, co-chair of Arnold &amp; Porter&rsquo;s Complex Litigation group, said: &ldquo;Sunita is an exceptional litigator whose command of privacy law, consumer class actions, and content moderation disputes makes her an outstanding addition to our technology industry practice. She brings sophisticated experience in some of the most consequential areas of technology litigation, and we are delighted to welcome her.&rdquo;</p> <p>Jonathan Hughes, head of Arnold &amp; Porter&rsquo;s San Francisco and Silicon Valley offices, added: &ldquo;Sunita&rsquo;s arrival not only continues to further strengthen our West Coast litigation platform, but her depth in privacy and technology litigation and her track record of success will be a tremendous asset to our clients and team across the U.S.&rdquo;</p> <p>A seasoned commercial litigator, Sunita represents technology, retail, and other clients in complex privacy, consumer class-action, and other commercial litigation disputes. She advises clients on compliance with privacy and consumer protection laws, particularly those that regulate the collection and use of biometric and other sensitive data. Sunita regularly defends large, high-stakes privacy and consumer class-action cases brought under the federal Wiretap Act, the Stored Communications Act, the Illinois Biometric Information Privacy Act, the California Invasion of Privacy Act, and California&rsquo;s consumer protection laws. She also has well over a decade of experience litigating and advising clients on content moderation issues and has represented some of the world&rsquo;s largest companies in high-profile cases implicating Section 230 of the Communications Decency Act and the First Amendment.</p> <p>In joining the firm, Sunita said: &ldquo;Some of today&rsquo;s most consequential legal battles in the technology sector involve the application of complex privacy and consumer protection laws to novel and developing technologies. Arnold &amp; Porter&rsquo;s multidisciplinary platform, deep bench of practitioners, and global reputation make it an ideal fit for my practice.&rdquo;</p> <p>Sunita earned her J.D. from the University of Southern California Gould School of Law and her B.A. from Occidental College.&nbsp; </p> <h3>About Arnold &amp; Porter</h3> <p><em>Arnold &amp; Porter combines sophisticated regulatory, litigation, and transactional capabilities to resolve clients&rsquo; most complex issues. With over 1,000 lawyers practicing in 16 offices worldwide, we offer an integrated approach that spans more than 40 practice areas. Through multidisciplinary collaboration and focused industry experience, we provide innovative and effective solutions to mitigate risks, address challenges, and achieve successful outcomes.</em></p>{C2C71FA3-5FAE-46ED-88A6-B98F5F8CD5FB}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/mark-epley-talks-federal-tax-developments-with-law360Arnold &amp; Porter Legislative &amp; Public Policy partner Mark Epley was recently quoted in the <em>Law360</em> article, &ldquo;Top Federal Tax Policies Of 2026: Midyear Report,&rdquo; discussing the most consequential developments in federal tax policy from the first half of 2026.&nbsp;Tue, 07 Jul 2026 00:00:00 -0500<p>Arnold &amp; Porter Legislative &amp; Public Policy partner Mark Epley was recently quoted in the <em>Law360</em> article, &ldquo;Top Federal Tax Policies Of 2026: Midyear Report,&rdquo; discussing the most consequential developments in federal tax policy from the first half of 2026. </p> <p>Regarding proposals to make administrative changes to the Internal Revenue Service, Mark highlighted the importance of bipartisan agreement in producing lasting improvements. </p> <p>&ldquo;In the absence of reconciliation, the only way to do tax legislation &mdash; or anything for that matter &mdash; is through genuine, bona fide, bipartisan agreement, and, as it happens, those are sort of the most durable changes,&rdquo; he said. &ldquo;Improving tax administration is something around which the two parties have been able to find consensus.&rdquo;</p> <p>As lawmakers work on IRS funding legislation ahead of the start of the fiscal year in September, Mark also noted that a sufficiently funded IRS is essential, yet often difficult to achieve.</p> <p>&ldquo;This has been a challenge for well over 10 years,&rdquo; he said. &ldquo;No spending bill can be passed without bipartisan consensus, which means that you need to get bipartisan consensus around the right level of funding for the IRS.&rdquo;</p> <p><a rel="noopener noreferrer" href="https://www.law360.com/tax-authority/articles/2487576?" target="_blank">Read the full article</a> (subscription required). </p>{9F603CF1-36BA-438E-9B97-9FED21FF7A7F}https://www.linkedin.com/posts/mehrinmasudelias_i-know-its-over-a-month-away-but-i-had-share-7462131230612865024-JRng/?utm_source=social_share_send&utm_medium=ios_app&rcm=ACoAAAKOK_IBrDL9HRj-Cks7TZjHfy9obKlQZn0Tue, 07 Jul 2026 00:00:00 -0500{56F34AC9-FD0A-40BE-A0B4-92635765BA1A}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/07/arnold-porters-trial-school-spotlighted-in-the-national-law-journal<em>The National Law Journal </em>recently featured Arnold &amp; Porter&rsquo;s annual trial school in the article, &ldquo;AI-Proof Work: How One Big Law firm's Trial School Trains Associates,&rdquo; which highlights the firm's long-standing commitment to and continued investment in preparing associates for courtroom training through immersive, hands-on training at a time when artificial intelligence is transforming many aspects of legal practice.Thu, 02 Jul 2026 00:00:00 -0500<p><em>The National Law Journal</em> recently featured Arnold &amp; Porter&rsquo;s annual trial school in the article, &ldquo;AI-Proof Work: How One Big Law firm's Trial School Trains Associates,&rdquo; which highlights the firm's long-standing commitment to and continued investment in preparing associates for courtroom training through immersive, hands-on training at a time when artificial intelligence is transforming many aspects of legal practice.</p> <p>The article notes that more than 50 associates, partners, counsel, and administrative professionals participated in this year&rsquo;s program, which combined workshops with five simultaneous mock trials led by more than 30 partners and counsel serving as coaches, judges, and witnesses.</p> <p>The program is directed by partners Jim Herschlein, co-chair of the firm's Litigation practice, and Pamela Yates, a partner in the Products Liability Litigation practice, who also served as a coach. Jim has led this program for over a decade, and in the article, Jim emphasized the firm's commitment to associate development. "It&rsquo;s part of our obligation to help develop the skills of our associates,&rdquo; he said. &ldquo;This program really gives us the chance to help them learn and advance their careers.&rdquo;</p> <p>Ken Chernof, co-chair of the firm&rsquo;s Litigation practice, explained why trial skills development remains an essential area of investment despite advances in AI. &ldquo;AI may replace some aspects of [the litigation] practice, but it is not going to replace stand-up trial work,&rdquo; he said. &ldquo;The associates that we have and the recruits that we&rsquo;re talking to want to know that they&rsquo;re going to be trained in the thing that AI can&rsquo;t train them in, which is standing up in court with a jury in the box, with a judge on the bench, and being able to cross-examine a witness effectively.&rdquo;</p> <p>On the firm&rsquo;s commitment to organizing the trial school in-house instead of outsourcing to an external program, Ken commented: &ldquo;[It] gives our partners a chance to see our associates in action; our associates learn from the partners they work with. It&rsquo;s a great kind of dynamic that produces, we think, even better results.&rdquo;</p> <p>The article also highlights the significant commitment of the firm's trial lawyers to the program. As a former Arnold &amp; Porter associate who participated in the trial school, partner Diana Sterk served as a coach to one of the trial teams this year and spoke on the value of the experience for young attorneys, noting that it can be the &ldquo;first time for a lot of associates to really understand all of the pieces that go into trial and to be thinking about it more holistically.&rdquo;</p> <p><a rel="noopener noreferrer" href="https://www.law.com/nationallawjournal/2026/07/01/ai-proof-work-how-one-big-law-firms-trial-school-trains-associates/" target="_blank">Read the full article</a> (subscription required).</p> <div style="padding:56.25% 0 0 0;position:relative;"><iframe src="https://player.vimeo.com/video/1206568384?dnt=1&amp;h=3c93f4d034&amp;badge=0&amp;autopause=0&amp;player_id=0&amp;app_id=58479" frameborder="0" allow="autoplay; fullscreen; picture-in-picture; clipboard-write; encrypted-media; web-share" referrerpolicy="strict-origin-when-cross-origin" style="position:absolute;top:0;left:0;width:100%;height:100%;" title="Trial School Photo Gallery"></iframe></div>{385FA727-1BDD-4A64-92C0-7025B21E4EDD}https://www.arnoldporter.com/en/perspectives/advisories/2026/07/china-imposes-export-control-and-government-procurement-restrictions-on-designated-us-companiesJohn Tanhttps://www.arnoldporter.com/en/people/t/tan-johnjohn.tan@cn.arnoldporter.comBobby McMillinhttps://www.arnoldporter.com/en/people/m/mcmillin-bobbybobby.mcmillin@arnoldporter.comSonia Tabrizhttps://www.arnoldporter.com/en/people/t/tabriz-soniasonia.tabriz@arnoldporter.comRonald D. Leehttps://www.arnoldporter.com/en/people/l/lee-ronald-dRonald.Lee@arnoldporter.comClaire E. Readehttps://www.arnoldporter.com/en/people/r/reade-claireclaire.reade@arnoldporter.comChuqiao Yuhttps://www.arnoldporter.com/en/people/y/yu-chuqiaochuqiao.yu@cn.arnoldporter.comOn June 22, 2026, China&rsquo;s Ministry of Commerce (MOFCOM) and Ministry of Finance (MOF) both announced restrictive measures targeting a total of 56 U.S. entities, likely in response to the U.S. Department of Defense&rsquo;s (DoD) recent expansion of its list of &ldquo;Chinese military companies,&rdquo; also known as the &ldquo;1260H List.&rdquo; This Advisory provides an overview of the June 22 announcements, and summarizes the key prohibitions and latest developments.Thu, 02 Jul 2026 00:00:00 -0500<p>On June 22, 2026, China&rsquo;s Ministry of Commerce (MOFCOM) and Ministry of Finance (MOF) both announced restrictive measures targeting a total of 56 U.S. entities, likely in response to the U.S. Department of Defense&rsquo;s (DoD) recent expansion of its list of &ldquo;Chinese military companies,&rdquo; also known as the &ldquo;1260H List.&rdquo; This Advisory provides an overview of the June 22 announcements, and summarizes the key prohibitions and latest developments.</p> <h2>Background</h2> <p>On June 8, 2026, the U.S. DoD released an updated version of the 1260H List, which added several prominent Chinese companies, including Alibaba, Baidu, and Tencent. As discussed in our <a href="/en/perspectives/advisories/2026/06/national-security-controls-and-the-life-sciences-sector">June 2026 Advisory</a>, inclusion on the 1260H List is significant because it may lead to a company&rsquo;s designation as a &ldquo;biotechnology company of concern&rdquo; (BCC) under the BIOSECURE Act, which could trigger additional restrictions on contracting with federal agencies and counterparties, as well as on the use of such companies&rsquo; biotechnology equipment or services. In addition, the U.S. DoD is prohibited from contracting directly with entities identified as Chinese military companies, and will be prohibited effective June 30, 2027 from purchasing any goods or services produced or developed by an entity on the 1260H list, among other restrictions. These restrictions apply both to the designated Chinese military companies as well as entities subject to the control of a listed entity.</p> <h2>The MOFCOM Announcement: Export Controls on 10 Companies</h2> <p>In its<a rel="noopener noreferrer" href="https://www.mofcom.gov.cn/zwgk/zcfb/art/2026/art_dfa9cc5c1e004d7fbb86f83d249e7986.html?mc_cid=bf45a4f936&amp;mc_eid=a833d46eef" target="_blank"> June 22 announcement</a>, MOFCOM added 10 U.S. companies to China&rsquo;s Export Control List pursuant to the Export Control Law (中华人民共和国出口管制法) and the Regulations on the Export Control of Dual-Use Items (中华人民共和国两用物项出口管制条例),[[N: See <a rel="noopener noreferrer" href="https://www.mofcom.gov.cn/zwgk/zcfb/art/2026/art_dfa9cc5c1e004d7fbb86f83d249e7986.html?mc_cid=bf45a4f936&amp;mc_eid=a833d46eef" target="_blank">https://www.mofcom.gov.cn/zwgk/zcfb/art/2026/art_dfa9cc5c1e004d7fbb86f83d249e7986.html?mc_cid=bf45a4f936&amp;mc_eid=a833d46eef</a>.]] imposing the following restrictions:</p> <ul> <li>Prohibiting the export, transfer, or supply of dual-use items to the listed entities, including banning any organizations or individuals, in any country or region, from providing China-origin dual-use items to the listed entities, and requiring the immediate cessation of any such ongoing export activities,&nbsp;</li> <li>Requiring export operators to apply to MOFCOM for approval in exceptional circumstances where such exports are deemed necessary.</li> </ul> <p>The 10 listed entities are primarily concentrated in the defense, aerospace, unmanned systems, and rare earth sectors. They include Red Cat Holdings, Teal Drones, and USA Rare Earth, among others.</p> <h2>The MOF Announcement: Government Procurement Restrictions on 46 Entities</h2> <p>In a <a rel="noopener noreferrer" href="https://gks.mof.gov.cn/guizhangzhidu/202606/t20260622_3991936.htm" target="_blank">separate June 22 announcement</a>, MOF prohibited the procurement of products manufactured by 46 U.S. entities. This restriction does not apply to U.S.-funded enterprises operating in China.</p> <p>The 46 entities consist of defense contractors and their affiliates, including major defense manufacturers such as Lockheed Martin, Boeing Defense, and Space &amp; Security, as well as defense technology companies, such as Shield AI. Several of these companies, such as certain Lockheed Martin affiliates and the Raytheon/Lockheed Martin Javelin joint venture, had previously been added to China&rsquo;s <a rel="noopener noreferrer" href="https://www.mofcom.gov.cn/cms_files/filemanager/policySummary/viewcore_02fa53a498c24b5e8070255b0928c6bf.html" target="_blank">Unreliable Entity List</a> (不可靠实体清单) in connection with arms sales to Taiwan. </p> <p>While the latest U.S. government expansion of the 1260H List added a number of Chinese biotech and consumer tech companies, the announcements by MOFCOM and MOF did not follow suit. Their response has focused more narrowly on sectors such as defense, where U.S.-China trade was already minimal, and on U.S. rare earths producers, who have been working to insulate their supply chains from China. This may signal China&rsquo;s view that avoiding significant escalation of political tensions with the United States at present is more helpful to China&rsquo;s overall goals.</p> <h2>Legal Challenges to Latest U.S. 1260H Designations</h2> <p>At least two companies named on the United States&rsquo; updated 1260H List have initiated legal challenges to their designation as Chinese military companies as of the publication of this Advisory:</p> <ul> <li>WuXi AppTec, a well-known life sciences and pharmaceutical services company, in the U.S. District Court for the District of Columbia on June 11, 2026, asserting that its designation lacks factual and legal basis and seeking removal from the list.[[N: See <a rel="noopener noreferrer" href="https://storage.courtlistener.com/recap/gov.uscourts.dcd.293402/gov.uscourts.dcd.293402.1.0.pdf" target="_blank">https://storage.courtlistener.com/recap/gov.uscourts.dcd.293402/gov.uscourts.dcd.293402.1.0.pdf</a>.]]</li> <li>Alibaba, a company with significant consumer tech operations, in the U.S. District Court for the Northern District of California on June 23, 2026, similarly asserting that its designation has &ldquo;no basis in fact or law,&rdquo; and seeking removal from the list.[[N: See <a rel="noopener noreferrer" href="https://storage.courtlistener.com/recap/gov.uscourts.cand.472746/gov.uscourts.cand.472746.1.0.pdf" target="_blank">https://storage.courtlistener.com/recap/gov.uscourts.cand.472746/gov.uscourts.cand.472746.1.0.pdf</a>.]]</li> </ul> <p>From publicly available information, no legal challenges have been mounted to the new Chinese restrictions at this time.</p> <p>If you have any questions about the content discussed in this Advisory or would like more information, including about compliance with applicable U.S. law or the path to challenge designation as a Chinese military company, please reach out to one of the authors or your existing Arnold &amp; Porter contact.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{6BBA81EA-5462-4E92-A978-CA9D178EE5ED}https://www.arnoldporter.com/en/perspectives/news/2026/07/daily-journal-names-dipanwita-deb-amar-and-david-reis-to-2026-top-labor-employment-lawyers-listArnold &amp; Porter partners Dipanwita Deb Amar and David Reis were named to the <em>Daily Journal</em>'s 2026 list of "Top Labor &amp; Employment Lawyers." The annual supplement profiles California's "top labor and employment attorneys specializing in litigation, PAGA matters, unlawful terminations, and workplace investigations."Wed, 01 Jul 2026 00:00:00 -0500<p>Arnold &amp; Porter partners Dipanwita Deb Amar and David Reis were named to the <em>Daily Journal</em>'s 2026 list of "Top Labor &amp; Employment Lawyers." The annual supplement profiles California's "top labor and employment attorneys specializing in litigation, PAGA matters, unlawful terminations, and workplace investigations."</p> <p>The <em>Daily Journal</em>'s profile of Dipanwita highlighted her nearly three decades of labor and employment practice and her recent success securing a unanimous jury verdict for Cynosure in a trade secrets and restrictive covenant dispute. Following post-trial rulings, the judgment exceeded $35 million. The profile also recognized Dipanwita's representation of clients in high-profile employment litigation and noted her experience handling discrimination, whistleblower, and agency matters nationwide.</p> <p>David, co-chair of the firm's Labor &amp; Employment practice, was recognized for his extensive trial and arbitration experience representing employers in complex employment disputes. The profile highlighted his successful defense of Hint, Inc. in a closely watched employment arbitration involving claims brought by the company's former founder-executives, as well as his work securing favorable outcomes in significant FEHA retaliation and PAGA litigation.</p> <p>Dipanwita and David have been consistently recognized as top labor and employment lawyers by the <em>Daily Journal</em>, with Dipanwita being named 13 times since 2012 and David being named 16 times since 2010.</p>{51AE216A-5DBA-46D7-B384-5E981A19F45B}https://www.arnoldporter.com/en/perspectives/advisories/2026/06/artificial-intelligence-privilege-and-work-product-emerging-risks-in-the-life-sciences-industryBrian P. Dunphyhttps://www.arnoldporter.com/en/people/d/dunphy-brian-pbrian.dunphy@arnoldporter.comSamuel Lonerganhttps://www.arnoldporter.com/en/people/l/lonergan-samuelsamuel.lonergan@arnoldporter.comRebecca Maller-Steinhttps://www.arnoldporter.com/en/people/m/maller-stein-rebeccarebecca.maller-stein@arnoldporter.comCarmela T. Romeohttps://www.arnoldporter.com/en/people/r/romeo-carmela-tcarmela.romeo@arnoldporter.comTess Sapersteinhttps://www.arnoldporter.com/en/people/s/saperstein-tesstess.saperstein@arnoldporter.comMelissa Webermanhttps://www.arnoldporter.com/en/people/w/weberman-melissamelissa.weberman@arnoldporter.comAs artificial intelligence (AI) use has become prevalent in nearly every stage of litigation, including pre-litigation efforts, courts and litigants alike have encountered challenges applying longstanding doctrine to new technology. Recent decisions indicate that courts disagree on whether communications with generative AI tools are more like disclosures to a third party or more like the use of traditional word-processing tools.Wed, 01 Jul 2026 00:00:00 -0500<h2>Introduction</h2> <p>As artificial intelligence (AI) use has become prevalent in nearly every stage of litigation, including pre-litigation efforts, courts and litigants alike have encountered challenges applying longstanding doctrine to new technology. Recent decisions indicate that courts disagree on whether communications with generative AI tools are more like disclosures to a third party or more like the use of traditional word-processing tools. In particular, courts are grappling with whether disclosure of sensitive information to publicly available AI platforms constitutes disclosure to a &ldquo;third party&rdquo; sufficient to waive attorney-client privilege or undermine attorney work-product protection.</p> <p>These developments are especially significant for life sciences companies, which routinely handle highly confidential and proprietary information, including intellectual property, trade secrets, clinical research, regulatory strategy, and commercially sensitive data. Because legal advice in the life sciences sector is often deeply intertwined with technical and scientific information, the use of AI tools in connection with legal and business decision-making presents heightened discovery and confidentiality risks.</p> <p>Recent decisions from courts across the country show courts approaching these questions differently, with results that often track the particular protection at issue, attorney-client privilege, or work product.</p> <h2><em>United States v. Heppner</em>: AI Communications and the Limits of Attorney-Client Privilege</h2> <p><a href="/en/perspectives/blogs/enforcement-edge/2026/02/the-attorney-client-machine-relationship-when-ai-use-jeopardizes-privilege">As we have discussed</a>, in <em>United States v. Heppner</em>, 820 F. Supp. 3d 292 (S.D.N.Y. 2026), Judge Rakoff addressed whether a criminal defendant&rsquo;s use of a generative AI platform to develop defense strategies could be protected by either the attorney-client privilege or the work-product doctrine. </p> <p>After learning he was the target of a criminal investigation, Heppner used the publicly available version of generative AI platform Claude to prepare reports that outlined a potential defense strategy. The government later seized those materials while executing a search warrant. Through (human, retained) counsel, Heppner argued that the materials were privileged because Heppner (1) inputted into Claude information that he had learned from counsel, among other things; (2) created the AI documents for the purpose of speaking with counsel to obtain legal advice; and (3) shared the contents of the AI documents with counsel. </p> <p>The court rejected Heppner&rsquo;s attorney-client privilege arguments, concluding that the AI documents &ldquo;lack at least two, if not all three, elements of the attorney-client privilege.&rdquo; Id. at 296. The court emphasized that communications with the publicly available version of Claude are not communications with an attorney, are not confidential, and were not made for the purpose of obtaining legal advice from a lawyer. Although the last element was a &ldquo;closer call&rdquo; because, as defense counsel argued, Heppner communicated with Claude for the &ldquo;express purpose of talking to counsel,&rdquo; defense counsel nonetheless conceded that these communications were not &ldquo;at the suggestion or direction of counsel.&rdquo; Id. at 297. Had that been the case, the court noted that Claude &ldquo;might arguably be said to have functioned in a manner akin to a highly trained professional who may act as a lawyer&rsquo;s agent within the protection of the attorney-client privilege.&rdquo; Id. However, the communications were made of Heppner&rsquo;s own volition, and Claude itself &ldquo;disclaims providing legal advice.&rdquo; Id. Accordingly, the communications were not privileged at the time they took place and could not &ldquo;somehow [be] alchemically changed into privileged ones upon being shared with counsel.&rdquo; Id. Moreover, the court held that even if the communications that Heppner provided to Claude were privileged, Heppner waived any such privilege by sharing the information with the publicly available version of Claude and Anthropic &ldquo;just as if he had shared it with any other third party.&rdquo; Id. at 297 n.3. Indeed, the court noted that Claude and Anthropic&rsquo;s &ldquo;written privacy policy to which users of Claude consent provides that Anthropic collects data on both users&rsquo; &lsquo;inputs&rsquo; and Claude&rsquo;s &lsquo;outputs,&rsquo; that it uses such data to &lsquo;train&rsquo; Claude, and that Anthropic reserves the right to disclose such data to a host of &lsquo;third parties,&rsquo; including &lsquo;governmental regulatory authorities.&rsquo;&rdquo; Id. at 296. Therefore, Heppner lacked a reasonable expectation that his inputs would not be shared with other third parties. Id. at 297 n.3.</p> <p>The court further concluded that the work-product doctrine did not apply because, even if the AI reports had been prepared in anticipation of litigation, they were not prepared at the behest of counsel and did not reflect defense counsel&rsquo;s strategy. Id. at 298. </p> <p><em>Heppner</em> reflects a strict, fact-bound application of the attorney-client privilege to communications with publicly available generative AI. If adopted more broadly, this reasoning could have substantial implications for clients who use publicly available AI tools in connection with legal matters, even where external legal counsel has been retained or in-house legal counsel has been involved in a brewing dispute. In particular, company employees need to be cautious not to conduct ostensibly legal research using publicly available AI tools without the direction or instruction of counsel. Such work is unlikely to be privileged in the first place because it does not involve communication with an attorney, and to the extent an employee inputs advice already received from counsel, that disclosure risks waiving the privilege the advice would otherwise enjoy. </p> <h2>AI and The Attorney Work Product Protection</h2> <p>While <em>Heppner</em>, one of the first in-depth judicial opinions addressing the interplay between the use of AI and the attorney-client privilege, applied those protections strictly, other courts have taken relatively expansive views of the attorney work product doctrine and AI-assisted litigation preparation. In both <em>Warner v. Gilbarco, Inc.</em>, 820 F. Supp. 3d 629 (E.D. Mich. 2026), and <em>Morgan v. V2X, Inc.</em>, No. 25-CV-01991-SKC-MDB, 2026 WL 864223 (D. Colo. Mar. 30, 2026), the courts concluded that <em>pro se</em> plaintiffs could invoke the work-product doctrine with respect to materials generated through the use of publicly available AI tools. </p> <p>Although aspects of the analyses in <em>Morgan</em> and <em>Warner</em> may be unique to <em>pro se</em> litigants and/or reflective of how one may waive the attorney-client privilege versus the attorney work product privilege, the courts&rsquo; expansive treatment of the parties&rsquo; expectation of privacy when interacting with AI is notable. In <em>Heppner</em>, the court stated that &ldquo;in light of Anthropic&rsquo;s privacy policy,&rdquo; the defendant &ldquo;had no reasonable expectation that the inputs would not be shared with other third parties.&rdquo; <em>Heppner</em>, 820 F. Supp. 3d at 297 n.3. By contrast, in <em>Morgan</em>, the court stated it was &ldquo;entirely reasonable for a person to expect some privacy and confidentiality when interacting with these tools, even though they understand a third party is behind the tool collecting and storing their information.&rdquo; 2026 WL 864223, at *5. Similarly, in <em>Warner</em>, the court noted that &ldquo;the work-product waiver has to be a waiver to <em>an adversary</em> or in a way likely to get into an adversary&rsquo;s hand &hellip; And ChatGPT (and other generative AI programs) are <em>tools</em>, <em>not persons</em>, even if they may have administrators somewhere in the background.&rdquo; 820 F. Supp. 3d at 636-37. As such, <em>Morgan</em> and <em>Warner</em> reflect a pragmatic understanding of modern technology use. For example, as the court in <em>Morgan</em> questioned: &ldquo;[t]oday, nearly all electronic interaction passes through third-party systems &hellip;. Does that mean that anyone with a Gmail account has forfeited all rights to confidentiality and privacy?&rdquo; 2026 WL 864223, at *4. This comparison suggests that some courts may be more sympathetic to litigants seeking work product-protection, depending on the factual circumstances, in light of the ubiquity of AI tools. </p> <h2>Open Questions and Unresolved Issues</h2> <p>Prior decisions have addressed whether an attorney&rsquo;s use of AI tools in connection with legal strategy or litigation preparation qualifies as work product.[[N: T<em>remblay v. OpenAI, Inc.</em>, No. 23-cv-03223, 2024 WL 3748003, at *2 (N.D. Cal. Aug. 8, 2024) (&ldquo;ChatGPT prompts were queries crafted by counsel and contain counsel&rsquo;s mental impressions and opinions&rdquo;); <em>Concord Music Group, Inc. v. Anthropic PBC</em>, No. 24-cv-03811, 2025 WL 1482734, at *2 (N.D. Cal. May 23, 2025) (agreeing with <em>Tremblay</em> that ChatGPT prompts are attorney work product).]] Several questions remain open, however. Courts have not resolved whether enterprise-grade AI systems, with contractual confidentiality protections and restricted data retention policies, alter the privilege analysis. The <em>pro se </em>litigant cases do not address whether attorneys will receive the same work-product protection if they use publicly available AI tools when creating work product. Nor do they resolve the question that matters most for corporate clients: not whether an employee&rsquo;s prompt is itself privileged, which <em>Heppner</em> effectively answered in the negative, but whether an employee who inputs a lawyer&rsquo;s privileged advice into a closed enterprise system waives the privilege, or whether that system&rsquo;s contractual confidentiality and retention terms support a reasonable expectation of confidentiality that avoids waiver. In <em>Morgan</em>, for example, the court entered a protective order requiring that confidential information be processed only using enterprise-tier AI accounts, which suggests that such accounts carry a more protectable privacy posture than consumer tools. 2026 WL 864223, at *7. But the court did not address privilege, and the question remains unresolved.</p> <p>Accordingly, companies and attorneys alike must be cautious when using AI to conduct pre-litigation case assessments or for daily use. For example, if an employee uses a publicly available AI tool to summarize or take notes of a meeting at which counsel provided legal advice, inputting that advice into the tool could be treated as a third-party disclosure that waives a privilege the communication would otherwise enjoy. As courts continue to confront these issues, privilege analyses may increasingly turn on the contractual and privacy terms governing the particular AI use (including whether the platform was used as part of an enterprise license versus publicly available), the platform&rsquo;s data retention and training practices, the nature of the information disclosed, and whether counsel directed or supervised the AI-assisted work.</p> <h2>Practical Implications for Life Sciences Companies</h2> <p>The implications of these developments are particularly acute for life sciences companies. Life sciences companies have widely adopted AI tools, and relevant legal advice frequently involves proprietary scientific information, regulatory strategy, intellectual property, clinical trial data, and commercially sensitive research that may be subject to discovery in fact-intensive post-acquisition litigation relying on expert opinions, including milestone and earnout disputes.</p> <p>Companies should assume that information shared with publicly available generative AI tools will be subject to discovery in a future litigation and that such interactions could constitute disclosure to a third party sufficient to waive privilege or work product protections. For example, in <em>Fortis Advisors, LLC v. Krafton, Inc.</em>, the Delaware Court of Chancery ruled against Krafton, finding that it breached an acquisition agreement that provided for contingent earnout payments and allowed the founders and CEO to be terminated only for cause. 354 A.3d 906, 953 (Del. Ch. 2026). Krafton&rsquo;s CEO had used ChatGPT for strategic advice to avoid earnout payments and relied on that advice. Id. at 927-28. In ruling against Krafton, the court rejected Krafton&rsquo;s explanation for firing certain founders, basing its opinion, in part, on evidence of the CEO&rsquo;s ChatGPT-designed strategy to force a deal on a term of the agreement or execute a takeover. Id. at 941 n.336. Accordingly, the court stated it would not permit Krafton to &ldquo;use the after-acquired evidence doctrine to fabricate cause where the evidence shows the termination decision was made for different reasons.&rdquo; Id. at 942. </p> <p>The <em>Fortis</em> decision underscores the practical realities of AI usage: AI interactions may be highly probative evidence concerning corporate intent, strategy, and decision-making. Separate from any privilege or waiver question, AI-generated content may create <a href="/en/perspectives/blogs/edata-edge/2026/05/court-rules-experts-ai-prompts-are-fair-game-under-rule-26">discoverable information</a>&nbsp;that plaintiffs or regulators later use to challenge a company&rsquo;s stated rationale for business decisions. Prompts may even constitute discoverable expert reliance materials under the Federal Rules. Courts have also restricted how AI tools may be used in litigation. In <em>Jefferies v. Harcros Chemicals, Inc.</em>, the court barred parties from uploading any discovery materials to publicly available AI tools, citing the inability to claw back information once it is incorporated into the model. Nos. 25-2352-KHV-ADM, 25-2569-KHV-ADM (D. Kan. 2026), ECF No. 152 at 7.</p> <h2>Best Practices and Risk Mitigation</h2> <p>Given the unsettled legal landscape, companies should always exercise caution when using generative AI tools in connection with legal or business matters, and counsel should adopt clear governance measures regarding AI use, particularly in legal contexts. </p> <p>Key considerations include:</p> <ul> <li>Avoid inputting privileged communications, litigation strategy, trade secrets, or confidential technical information into publicly available AI platforms.</li> <li>Use enterprise tools governed by contractual confidentiality, no-training, and limited-retention terms.</li> <li>Implement internal policies and trainings governing employee and in-house legal use of generative AI, including regarding privilege and confidentiality risks associated with AI platforms, and ensure close coordination between the business and legal departments on these issues.</li> <li>Ensure that legal advice is clearly segregated from business discussions when using AI-assisted workflows.</li> <li>Consider the role of outside counsel in supervising or directing AI-assisted internal investigations and litigation preparation.</li> <li>Carefully evaluate vendor terms governing data retention, training, and access rights.</li> </ul>{F92DA9A2-9D9E-427C-B12C-4006D1C6E2C7}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/06/bobby-mcmillin-discusses-biosecure-act-in-statArnold &amp; Porter Legislative &amp; Public Policy partner Bobby McMillin was recently quoted by<em> STAT</em> discussing the impact of the Biosecure Act and the potential for additional legislative and regulatory measures.&nbsp;Tue, 30 Jun 2026 00:00:00 -0500<p>Arnold &amp; Porter Legislative &amp; Public Policy partner Bobby McMillin was recently quoted by <em>STAT</em> discussing the impact of the Biosecure Act and the potential for additional legislative and regulatory measures. </p> <p>&ldquo;The itch has not been entirely scratched,&rdquo; Bobby said, in reference to policymakers&rsquo; interest in attempting to counter the rise of Chinese biopharma companies. </p> <p>Bobby also noted that it took approximately two years for the Biosecure Act to pass, and that new legislative proposals could likewise take considerable time for Congress to consider. </p> <p><a rel="noopener noreferrer" href="https://www.statnews.com/2026/06/25/china-biotech-next-steps-after-biosecure-act/" target="_blank">Read the full article</a> (subscription required). </p>{1AADB2B8-2318-43BB-919C-3106E16F2F91}https://www.arnoldporter.com/en/perspectives/advisories/2026/06/washington-states-cema-amendment-a-speedbump-not-a-roadblockJami Vibberthttps://www.arnoldporter.com/en/people/v/vibbert-jamijami.vibbert@arnoldporter.comE. Alex Beroukhimhttps://www.arnoldporter.com/en/people/b/beroukhim-e-alexalex.beroukhim@arnoldporter.comAaron E. Millsteinhttps://www.arnoldporter.com/en/people/m/millstein-aaron-eAaron.Millstein@arnoldporter.comElie Salamonhttps://www.arnoldporter.com/en/people/s/salamon-elieelie.salamon@arnoldporter.comWashington State has seen an explosion of lawsuits under its Commercial Electronic Mail Act (CEMA, Ch. 19.190 RCW), stemming from the Washington Supreme Court&rsquo;s ruling last year in <em>Brown v. Old Navy</em> expanding the scope of &ldquo;false or misleading&rdquo; email content.&nbsp;Our latest Advisory examines what the new law changes, what it leaves unchanged, and the practical steps businesses should consider to reduce risk while navigating Washington&rsquo;s evolving enforcement landscape.Tue, 30 Jun 2026 00:00:00 -0500<h2>Summary</h2> <p>Washington State has seen an explosion of lawsuits under its Commercial Electronic Mail Act (CEMA, Ch. 19.190 RCW), stemming from the Washington Supreme Court&rsquo;s ruling last year in<em> Brown v. Old Navy</em> expanding the scope of &ldquo;false or misleading&rdquo; email content. </p> <p>As discussed by many commentators, the decision extended CEMA&rsquo;s reach beyond traditional commercial advertising to include misleading email subject lines. Because statutory damages were previously set at $500 per message without the need to show actual damages, companies communicating electronically with Washington residents have faced new, sprawling exposure and must reevaluate compliance programs. </p> <p>CEMA has been a changing landscape with a recent statutory amendment going into effect to lower the statutory penalty and amend the knowledge requirement. Additionally, recent court decisions have provided further guidance on common defenses companies have been employing in CEMA class actions.</p> <h2>Recent Statutory Amendments</h2> <p>The surge in CEMA lawsuits did not go unnoticed. The Washington legislature took action this year passing HB 2274 in March 2026, which went into effect on June 11, 2026. Unfortunately, the amendment does nothing to help companies already facing CEMA litigation. The amendment applies solely to those lawsuits filed on or after June 11, 2026. For lawsuits filed before June 11, 2026, the law does not apply.</p> <p>The law was designed as a quick fix to address the flood of litigation over routine, non-deceptive emails that contained subject lines commonly used in marketing. Testimony in support of the bill highlighted these concerns, noting that CEMA does not require proof of any consumer harm and that the $500 statutory damages penalize companies for technical violations of the statute. </p> <p>HB 2274 addressed these issues in two ways:</p> <ol> <li><strong>Statutory Damages</strong>: Reducing the statutory penalty to $100 per violation</li> <li><strong>Knowledge</strong>: Removing the strict liability standard by requiring knowledge that the subject line was false or misleading</li> </ol> <p>Specifically, HB 2274 amended RCW 19.190.020 to explicitly require a defendant had &ldquo;actual knowledge or knowledge fairly implied on the basis of objective circumstances&rdquo; that the subject line of the email contains false or misleading information. ESHB 2274, Sec. 1. This language is narrower than originally proposed to the legislature. The original bill would have also required proving that the subject line was likely &ldquo;to mislead a recipient, acting reasonably under the circumstances, about a fact material to the relevant transaction &hellip;&rdquo; HB 2274, Sec. 1. But even the narrowed version substantially helps companies facing CEMA lawsuits.</p> <p>The amendment reduces the incentive for plaintiffs by lowering the statutory damages available and requiring some element of knowledge for false or misleading subject lines. By requiring plaintiffs to plead and prove that a defendant had actual knowledge, or knowledge fairly implied from objective circumstances, that a subject line was false or misleading, the amendment creates a substantial new evidentiary hurdle for plaintiffs, who must now plead and prove a defendant&rsquo;s knowledge rather than rely on a strict liability standard. This additional element is likely to make CEMA claims for plaintiffs more challenging to litigate and win. With the effective date of June 11, 2026, plaintiffs rushed to file their class actions before then. But even a $100 statutory damages per violation remains an enticing prospect for plaintiffs. Accordingly, companies should still evaluate their marketing programs that include Washington State residents to ensure they are compliant.</p> <h2>Substantive Update From Recent Court Decisions</h2> <p>Most significantly, since our last update, federal courts in Washington are now questioning whether cases removed to federal court should be remanded for lack of Article III standing. See <em>Liss v. Skechers USA Inc.</em>, No. 3:25-cv-05861-DGE, 2026 WL 1392327 (W.D. Wash. May 19, 2026); <em>Nuri v. True Religion Apparel</em>, No: 2:25-cv-00690-LK, 2026 WL 864886 (W.D. Wash. March 30, 2026); <em>Montes v. Catalyst Brands</em> LLC, No. 2:25-CV-0281-TOR, 2025 WL 3485827 (E.D. Wash. Dec. 4, 2025). This very issue is currently pending before the Ninth Circuit in <em>Montes v. Penney OpCo, LLC</em>, No. 25-8045 (9th Cir.). The outcome may shape whether many of these cases remain in federal court at all.</p> <p>Courts have also begun ruling on other defenses, including whether the CAN-SPAM Act preempts CEMA and whether CEMA violates the U.S. Constitution&rsquo;s dormant commerce clause. Federal courts presented with the preemption arguments have uniformly rejected them. See <em>Agnew v. Macy&rsquo;s Retail Holdings, LLC</em>, 2026 WL 764140 (W.D. Wash. Mar. 18, 2026); <em>Kempf v. Fullbeauty Brands Operations, LLC</em>, 2026 WL 395677 (W.D. Wash. Feb. 12, 2026). Similarly, courts considering facial dormant commerce clause violations have rejected these defenses as well. See <em>Repperger v. Ulta Salon, Cosmetics &amp; Fragrance</em>, No. 2:25-cv-00526-RLP, 2026 WL 1157157 (E.D. Wash. Apr. 28, 2026).</p> <p>These recent decisions increase the risks associated with CEMA class actions in Washington. In assessing these potential defenses, defendants should keep in mind that neither issue has been decided by an appellate court and there may be unique factors that warrant consideration of each defense in a particular case. </p> <p>CEMA remains an active litigation front for companies in Washington with new developments each passing month. Our Seattle-based attorneys are well positioned to advise clients on CEMA compliance, defend class actions, and help companies align marketing practices with evolving state and federal requirements. </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{E076F25D-90B4-4E96-8BFC-F7FE5EDD1630}https://ifila.org/young-ifila/young-ifila-london-2026-event/Bart.Wasiak@arnoldporter.comTue, 30 Jun 2026 00:00:00 -0500{464B5F71-9072-4987-9A7F-0DFB0DBB2622}https://www.biosliceblog.com/2026/06/virtual-and-digital-health-digest-june-2026/Alexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comFabien Royhttps://www.arnoldporter.com/en/people/r/roy-fabienfabien.roy@arnoldporter.comDr. Beatriz San Martinhttps://www.arnoldporter.com/en/people/s/san-martinbeatriz.sanmartin@arnoldporter.comEleri Abreohttps://www.arnoldporter.com/en/people/a/abreo-eleri-feleri.abreo@arnoldporter.comEmma Elliston, Ph.D.https://www.arnoldporter.com/en/people/e/elliston-emmaemma.elliston@arnoldporter.comAna González-Lamuñohttps://www.arnoldporter.com/en/people/g/gonzalez-lamuno-anaana.lamuno@arnoldporter.comShama Aktarhttps://www.arnoldporter.com/en/people/a/aktar-shamashama.aktar@arnoldporter.comHeba Jalilhttps://www.arnoldporter.com/en/people/j/jalil-hebaheba.jalil@arnoldporter.comTue, 30 Jun 2026 00:00:00 -0500{FCEF59BB-C2F9-4CB9-94B2-6B9D5DEE465E}https://www.arnoldporter.com/en/perspectives/advisories/2026/06/usda-proposes-major-overhaul-of-afida-rulesMarisa N. Boccihttps://www.arnoldporter.com/en/people/b/bocci-marisa-nMarisa.Bocci@arnoldporter.comKari L. Larsonhttps://www.arnoldporter.com/en/people/l/larson-kari-lKari.Larson@arnoldporter.comJeffrey C. Thomsonhttps://www.arnoldporter.com/en/people/t/thomson-jeffrey-cjeff.thomson@arnoldporter.com<p>The U.S. Department of Agriculture&rsquo;s (USDA) June 25, 2026 proposed rule would significantly expand and strengthen the Agricultural Foreign Investment Disclosure Act (AFIDA) framework by broadening the definition of agricultural land, narrowing lease and other reporting exemptions, lowering the threshold for foreign ownership disclosures, expanding beneficial ownership and structural reporting requirements, increasing penalties, requiring electronic filing, and transferring program administration to USDA&rsquo;s Office of Homeland Security. Framed as a national security initiative intended to improve information sharing with the Committee on Foreign Investment in the United States and scrutiny of foreign adversaries, the proposal could bring previously exempt holdings and transactions within AFIDA&rsquo;s scope, particularly affecting institutional investors, developers, renewable energy and infrastructure companies, and U.S. entities with upstream foreign ownership. The proposed changes would also interact with an expanding patchwork of state foreign-ownership laws, creating additional compliance considerations for investors and landowners.</p>Tue, 30 Jun 2026 00:00:00 -0500<p>On June 25, 2026, the U.S. Department of Agriculture (USDA) published a proposed rule (Docket No. USDA-2026-0001; RIN 0560-AI70) that would significantly reshape the regulatory framework under the Agricultural Foreign Investment Disclosure Act of 1978 (AFIDA). The proposed rule would broaden what counts as &ldquo;agricultural land,&rdquo; narrow long-standing reporting exemptions, expand beneficial ownership disclosure, increase penalties, and move administration of the program to USDA&rsquo;s Office of Homeland Security. A wide range of market participants could be affected, including institutional investors in farmland and timberland; commercial and rural-land developers; renewable energy and infrastructure developers; foreign persons and U.S.-organized entities with upstream foreign ownership; and even wholly domestic owners who lease to foreign tenants. Public comments are due August 10, 2026.</p> <h2>Who Counts as a &ldquo;Foreign Person&rdquo;?</h2> <p>Before turning to the proposed changes, it is worth pausing on a threshold point that is easy to overlook: AFIDA&rsquo;s reporting obligations turn on whether a filer is a &ldquo;foreign person,&rdquo; and that term is defined far more broadly than many U.S. owners assume. A &ldquo;foreign person&rdquo; includes not only foreign individuals, foreign governments, and entities organized outside the United States, but also U.S.-organized entities in which foreign persons hold a &ldquo;significant interest or substantial control.&rdquo; A domestic entity can therefore be treated as a foreign person, and be drawn into AFIDA reporting, based solely on its upstream ownership. The proposed rule makes this more likely by lowering the aggregate-ownership threshold from 50% to 10%, and by counting beneficial owners and any interest held by a foreign adversary. A U.S. fund, partnership, or holding company should not assume AFIDA is inapplicable simply because it is organized domestically; the question turns on who holds direct and indirect interests in the entity. Separately, a wholly domestic landlord whose tenant is a foreign person may find that the tenant carries its own independent reporting obligation.</p> <h2>A National Security Initiative</h2> <p>The proposed rule is expressly framed as a national security measure rather than the data-collection exercise AFIDA has historically been. USDA ties the rulemaking to a January 2024 Government Accountability Office report finding that USDA had not shared timely or reliable AFIDA data with the Committee on Foreign Investment in the United States (CFIUS), and to the July 2025 National Farm Security Action Plan, which declares that &ldquo;farm security is national security&rdquo; and makes reform of the AFIDA process a top action item. A recurring theme throughout the proposed rule is improving the flow of AFIDA data to CFIUS and applying heightened scrutiny to foreign adversaries. It bears emphasis, however, that AFIDA remains a disclosure statute: it does not authorize USDA to block, condition, or unwind a transaction. National security review of farmland transactions continues to rest with CFIUS, which generally reaches agricultural land only where the land qualifies as &ldquo;covered real estate&rdquo; (for example, by proximity to a military installation) or forms part of a covered transaction.</p> <h2>Key Proposed Changes</h2> <h3>Expanded Definition of &ldquo;Agricultural Land&rdquo;</h3> <p>The proposed rule significantly broadens the definition of &ldquo;agricultural land,&rdquo; replacing the decades-old Standard Industrial Classification codes with current North American Industry Classification System (NAICS) codes and adding: solar and wind energy generation on agricultural land; pipeline transportation corridors; farm product warehousing and processing; conservation land that could be used for farming, ranching, forestry, or timber production; and agricultural research and development activities. The proposed rule would also eliminate the current exemption for tracts of 10 acres or less generating under $1,000 in annual receipts and, for the first time, make easements and rights-of-way for non-agricultural use reportable. Importantly, land meeting the definition would be treated as agricultural land regardless of local zoning classification. Owners of farmland, timberland, conservation land, renewable energy and pipeline interests, and path-of-growth real estate holdings may wish to reassess their portfolios for potential filing obligations.</p> <h3>Lease Exemption Dramatically Narrowed</h3> <p>Currently, leaseholds of less than 10 years are exempt from AFIDA reporting. Under the proposed rule, that exemption would be reduced to leases of less than one year for most foreign persons, and eliminated entirely for entities from or controlled by foreign adversary countries (China, Russia, Iran, North Korea, and others designated by the Secretary of State). Short-term agricultural leases, crop production arrangements, and energy site leases that are currently exempt may become reportable.</p> <h3>Enhanced Beneficial Ownership and Structural Disclosure</h3> <p>Foreign persons that are neither individuals nor governments, including funds, partnerships, and corporate entities, would face substantially expanded disclosure requirements. The proposed rule would lower the threshold at which aggregated foreign interests constitute &ldquo;significant interest or substantial control&rdquo; from 50% to 10% (USDA has asked for comment on a 5% threshold) and would eliminate the current reporting exemptions for certain shareholders. The proposed rule would require: identification of all persons holding 10% or more of any interest (individually or in aggregate); identification of all &ldquo;beneficial owners,&rdquo; defined broadly to include anyone exercising decision-making authority over the land regardless of percentage held; ownership diagrams depicting the relationship between all interest holders; tax identification numbers and passport numbers for all foreign persons; and disclosure of shell corporation structures at all intermediary tiers. Filers would also have to submit a digital, open-source geospatial map delineating the land and its uses, together with current acreage. The proposed definition of &ldquo;shell corporation&rdquo; is broadly drawn and may capture holding vehicles common in institutional real estate structures.</p> <h3>Stricter Penalties: Restructured and Increased</h3> <p>The proposed rule significantly increases civil penalties and removes the existing provisions allowing downward adjustment of penalties. It would create three separate late-filing penalty schemes (for acquisitions and holdings, for transfers and inheritances, and for newly reportable holdings), each beginning with an initial $250 penalty assessed on the 91st day. Thereafter, penalties accrue on two tracks: entities designated as foreign adversaries or foreign-adversary-controlled entities would accrue 2.5% of fair market value per week, and all other foreign persons 1.5% per week. For portfolios holding multiple parcels, exposure could compound substantially.</p> <h3>Electronic Filing and New Portal</h3> <p>All AFIDA filings would have to be submitted through USDA&rsquo;s new online portal (afida.landmark.usda.gov), which requires a Login.gov account. The paper FSA-153 form would be phased out, and the proposed rule removes form-specific references so that USDA can deploy a new electronic form. Filers who cannot access the portal could seek assistance from their local Farm Service Agency (FSA) office.</p> <h3>Administration Transferred to Office of Homeland Security</h3> <p>Administration of AFIDA is moving out of FSA. A separate final rule issued April 13, 2026 already transferred AFIDA authority from FSA to USDA&rsquo;s Assistant Secretary for Administration, and this proposed rule would codify the sub-delegation of day-to-day administration to USDA&rsquo;s Office of Homeland Security (OHS), a change that reflects the program&rsquo;s more explicit national security orientation. FSA would remain the initial point of contact for filers and would assist with fair market value determinations. The proposed rule also overhauls penalty appeals: the response window would shrink from 60 to 30 days; the options to submit a written statement contesting liability or to request a hearing would be eliminated in favor of a single review by the OHS Director; payment would be required electronically through pay.gov; and decisions would be administratively final, with unpaid penalties referred to the U.S. Department of Justice.</p> <h2>Interaction With State Law</h2> <p>AFIDA operates alongside a growing patchwork of state laws. Roughly two dozen states now restrict foreign ownership of agricultural land or impose their own reporting requirements, and these vary widely in scope, triggers, and penalties. Compliance with AFIDA does not satisfy these separate state obligations. The proposed rule states that conflicting state and local laws would be preempted, while also reminding filers that they must continue to comply with applicable state and local restrictions and that USDA will keep sharing filings with state departments of agriculture. That tension, together with pending constitutional challenges to certain state foreign-ownership statutes, leaves the federal-state landscape unsettled.</p> <h3>What This Means for Investors and Landowners</h3> <p>If finalized, the rule would likely require many parties that are currently exempt, or that have never considered themselves subject to AFIDA, to evaluate new disclosure obligations. The proposed rule includes a limited safe harbor period to allow parties time to make compliant filings if deemed necessary. Different categories of market participants could be affected in different ways:</p> <ul> <li><strong>Institutional investors in farmland and timberland</strong>: Assess whether holdings fall within the expanded definition of agricultural land and whether fund, joint venture, or trust structures cross the lowered 10% aggregate threshold or trigger the new beneficial-ownership and ownership-diagram disclosures. Also, whether the reduced acreage area and changes to leasehold reporting requirements have expanded prior reporting obligations.&nbsp;</li> <li><strong>Commercial and rural-land developers</strong>: Pre-development or path-of-growth parcels that were farmed or grazed within the prior five years may qualify as agricultural land even if rezoned for another use; this proposed rule clarifies that the filing obligation would apply regardless of local zoning.</li> <li><strong>Renewable energy and infrastructure developers</strong>: Solar, wind, and pipeline interests, as well as easements and rights-of-way, may be reportable, including under site-control leases that were previously exempt.</li> <li><strong>U.S. entities with upstream foreign ownership</strong>: These parties face the most extensive new disclosure, including ownership diagrams, identifiers, and geospatial maps. Where a foreign adversary is involved, they also face the higher penalty track and the loss of lease exemptions.</li> </ul> <p>The proposed rule provides a 90-day window after the final rule&rsquo;s effective date for newly reportable holdings to come into compliance, along with a one-year reduced-penalty transition period. We are monitoring this rulemaking and can assist with assessing portfolio exposure, preparing public comments, and compliance planning. Comments on the proposed rule are due August 10, 2026.</p> <p>The proposed changes could have important implications for foreign investors, agribusinesses, lenders, renewable energy companies, and other organizations with interests in U.S. real estate. This alert is for informational purposes only and does not constitute legal advice.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{FE67D4D1-BEB3-4DCD-A276-4949EA1ABADC}https://www.arnoldporter.com/en/perspectives/media-mentions/2026/06/james-joseph-quoted-in-the-chronicle-of-philanthropy-on-evolving-trends-in-major-donor-givingJames Joseph, Arnold &amp; Porter partner and co-chair of the firm's Tax practice, was quoted in <em>The Chronicle of Philanthropy</em> article, "Are Wealthy Donors Giving Big Again? Yes. But It's Complicated," examining how wealthy donors are navigating charitable giving amid continued political and economic uncertainty.Mon, 29 Jun 2026 00:00:00 -0500<p>James Joseph, Arnold &amp; Porter partner and co-chair of the firm's Tax practice, was quoted in <em>The Chronicle of Philanthropy</em> article, "Are Wealthy Donors Giving Big Again? Yes. But It's Complicated," examining how wealthy donors are navigating charitable giving amid continued political and economic uncertainty.</p> <p>Jim explained that while many affluent donors paused or reconsidered their giving amid heightened uncertainty, they are increasingly moving forward with major gifts as they adapt to a changing philanthropic landscape. "People have just decided or figured out they're going to have to live with this political uncertainty and they can't do nothing forever, whatever the risks are," he said.</p> <p>He noted that concerns about heightened scrutiny of charitable giving have influenced how donors give rather than whether they give. Some philanthropists are broadening their charitable strategies by supporting organizations with wider missions, such as serving low-income communities across demographics.</p> <p>Jim also observed that the current fundraising environment favors long-standing donor relationships. "It's really hard to cultivate new donors in this environment," he noted, advising nonprofit organizations to engage their most committed supporters with realistic conversations about organizational needs and how they can provide meaningful assistance.</p> <p><a rel="noopener noreferrer" href="https://www.philanthropy.com/news/are-wealthy-donors-giving-big-again-yes-but-its-complicated/" target="_blank">Read the full article</a> (subscription required).</p>{A0FDBB43-25D6-4776-9E22-DF808CEFCEAF}https://www.arnoldporter.com/en/perspectives/news/2026/06/arnold-porter-represents-chemours-in-first-comprehensive-federal-pfas-settlementArnold &amp; Porter recently advised The Chemours Company in its settlement to resolve claims asserted by the U.S. Environmental Protection Agency (EPA) relating to per- and polyfluoroalkyl (PFAS) discharges and other alleged non-compliance actions, primarily at the company&rsquo;s New Jersey, North Carolina, and West Virginia facilities.&nbsp;Mon, 29 Jun 2026 00:00:00 -0500<p>Arnold &amp; Porter recently advised <a rel="noopener noreferrer" href="https://www.prnewswire.com/news-releases/chemours-reaches-agreement-with-us-epa-to-resolve-claims-relating-to-pfas-302809444.html" target="_blank">The Chemours Company</a> in its settlement to resolve claims asserted by the U.S. Environmental Protection Agency (EPA) relating to per- and polyfluoroalkyl (PFAS) discharges and other alleged non-compliance actions, primarily at the company&rsquo;s New Jersey, North Carolina, and West Virginia facilities. </p> <p>This is the first comprehensive federal agreement with a major manufacturer of PFAS substances. The settlement both provides the industry with greater clarity on future compliance requirements and actions to support long-term responsible manufacturing and acknowledges Chemours&rsquo; role in manufacturing critical materials for military and commercial use. </p> <p>Arnold &amp; Porter has extensive experience defending and advising companies regarding <a href="/en/services/capabilities/practices/environmental-enforcement-toxic-tort-litigation/pfas">PFAS</a>, including in litigation, regulatory, and legislative matters, bringing to bear our deep understanding of federal and state environmental and toxic tort law. </p> <p>The Arnold &amp; Porter team was led by Environmental Co-Chair Allison Rumsey and senior counsel Lawrence Culleen and Joel Gross. </p>{01D924EB-9A46-4034-80E2-5D5363B0167E}https://www.arnoldporter.com/en/perspectives/news/2026/06/managing-ip-names-four-arnold-porter-lawyers-as-western-europe-ip-stars<em>Managing IP</em> recently recognized Arnold &amp; Porter in its 2026 IP Stars Western Europe rankings as an &ldquo;Other Notable Firm&rdquo; for IP Transactions in the United Kingdom (England).Mon, 29 Jun 2026 00:00:00 -0500<p><em>Managing IP</em> recently recognized Arnold &amp; Porter in its 2026 IP Stars Western Europe rankings as an &ldquo;Other Notable Firm&rdquo; for IP Transactions in the United Kingdom (England).</p> <p>The guide also highlighted four Arnold &amp; Porter lawyers for their individual achievements in intellectual property, including:</p> <ul> <li>George Jenkins &mdash; Transactions Star (United Kingdom, England)</li> <li>Beatriz San Martin &mdash; Patent Star (United Kingdom, England)</li> <li>Ewan Townsend &mdash; Notable Practitioner (United Kingdom, England)</li> <li>Tom Wilson &mdash; Rising Star (United Kingdom, England)</li> </ul> <p>IP Stars compiles peer and client feedback on attorneys and ranks senior practitioners who are leaders in intellectual property, taking into account expertise, workload, and outcomes achieved for clients. </p>{E1595BCD-66DB-4F88-920E-C96EB279F3ED}https://www.arnoldporter.com/en/perspectives/publications/2026/06/virtual-digital-health-digestAllison W. Shurenhttps://www.arnoldporter.com/en/people/s/shuren-allison-wallison.shuren@arnoldporter.comAlexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comAbeba Habtemariamhttps://www.arnoldporter.com/en/people/h/habtemariam-abebaAbeba.Habtemariam@arnoldporter.comFabien Royhttps://www.arnoldporter.com/en/people/r/roy-fabienfabien.roy@arnoldporter.comDr. Beatriz San Martinhttps://www.arnoldporter.com/en/people/s/san-martinbeatriz.sanmartin@arnoldporter.comEleri Abreohttps://www.arnoldporter.com/en/people/a/abreo-eleri-feleri.abreo@arnoldporter.comNancy L. Perkinshttps://www.arnoldporter.com/en/people/p/perkins-nancy-lnancy.perkins@arnoldporter.comCasey Brouhardhttps://www.arnoldporter.com/en/people/b/brouhard-caseycasey.brouhard@arnoldporter.comMickayla A. Stogsdillhttps://www.arnoldporter.com/en/people/s/stogsdill-mickaylamickayla.stogsdill@arnoldporter.comShama Aktarhttps://www.arnoldporter.com/en/people/a/aktar-shamashama.aktar@arnoldporter.comEmma Elliston, Ph.D.https://www.arnoldporter.com/en/people/e/elliston-emmaemma.elliston@arnoldporter.comAna González-Lamuñohttps://www.arnoldporter.com/en/people/g/gonzalez-lamuno-anaana.lamuno@arnoldporter.comHeba Jalilhttps://www.arnoldporter.com/en/people/j/jalil-hebaheba.jalil@arnoldporter.comBrianna Morigneyhttps://www.arnoldporter.com/en/people/m/morigney-briannabrianna.morigney@arnoldporter.comLily Caohttps://www.arnoldporter.com/en/people/c/cao-lilylily.cao@arnoldporter.comCaroline Oliverhttps://www.arnoldporter.com/en/people/o/oliver-carolinecaroline.oliver@arnoldporter.comThis digest covers key virtual and digital health regulatory and public policy developments during May and early June 2026 from the United States, United Kingdom, and European Union.Mon, 29 Jun 2026 00:00:00 -0500<p>This digest covers key virtual and digital health regulatory and public policy developments during May and early June 2026 from the United States, United Kingdom, and European Union.</p> <h2>In this issue, you will find the following:</h2> <h3>U.S. News</h3> <ul> <li><a href="#Health Care Fraud And Abuse Updates">Health Care Fraud and Abuse Updates</a></li> <li><a href="#Privacy and AI Updates">Privacy and Artificial Intelligence (AI) Updates</a></li> <li><a href="#Policy Updates">Policy Updates</a></li> <li><a href="#FDA Updates">FDA Updates</a></li> </ul> <h3>U.S. Featured Content </h3> <p>This month&rsquo;s June Digest includes the sentencing of three defendants in a telemedicine fraud scheme involving more than $1.97 billion in fraudulent prescriptions and $758 million paid by private insurers; a $62,500 False Claims Act settlement with Illinois physician Dr. Alexandria Williams related to allegedly medically unnecessary durable medical equipment (DME) orders; and the conviction of HealthSplash founder Brett Blackman for his role in the DMERx platform and a Medicare fraud scheme involving more than $1 billion billed and over $450 million paid. This Digest also covers the House Energy and Commerce Subcommittee&rsquo;s June 3, 2026 hearing on the proposed Securing and Establishing Consumer Uniform Rights and Enforcement over Data Act (SECURE Data Act) and related debate over federal privacy standards and state law preemption, as well as Mayo Clinic and Microsoft&rsquo;s collaboration to develop a frontier AI model for clinical use. Federal policy developments include congressional resolutions seeking disapproval of the Centers for Medicare &amp; Medicaid Services&rsquo; (CMS) Wasteful and Inappropriate Service Reduction (WISeR) model for artificial intelligence (AI)-enabled prior authorization, CMS&rsquo; planned &ldquo;Gold Card&rdquo; approach for high-performing providers, the White House Executive Order on advanced AI innovation and cybersecurity, and the Great American AI Act discussion draft, which would establish federal AI standards infrastructure, impose risk framework and audit obligations on large frontier model developers, and temporarily preempt certain state AI laws.</p> <h3>EU and UK News</h3> <ul> <li><a href="#Regulatory Updates">Regulatory Updates</a></li> <li><a href="#Privacy Updates">Privacy Updates</a></li> <li><a href="#IP Updates">IP Updates</a></li> </ul> <h3>EU/UK Featured Content </h3> <p>May 2026 saw continued momentum across the European Union (EU) and United Kingdom (UK) toward modernizing and streamlining the regulatory landscape for digital health, with a particular focus on accommodating AI-enabled technologies while reducing unnecessary complexity. A central development was the provisional agreement on the Digital Omnibus package, which seeks to simplify the application of the EU AI Act by clarifying overlaps with sector-specific legislation, deferring key obligations, and introducing more proportionate requirements.</p> <p>In parallel, regulators on both sides of the Channel are advancing reforms to ensure that medical device frameworks remain fit for purpose in an increasingly software-driven and data-centric environment. In the EU, the activation of key European Database on Medical Devices (EUDAMED) modules marks a major step toward enhanced transparency and traceability, while ongoing discussions on the Medical Devices Regulation 2017/745 (MDR)/In Vitro Diagnostic Regulation 2017/746 (IVDR) revisions highlight a strong policy drive toward simplification and better integration of AI. In the UK, the Medicines and Healthcare products Regulatory Agency&rsquo;s (MHRA) proposed pre-market reforms and broader thinking on AI regulation signal a shift toward more flexible, lifecycle-based oversight, with greater emphasis on post-market monitoring and innovation support.</p> <p>Data governance and cybersecurity also remain high on the agenda. Industry and regulators alike are emphasizing the need for coherent, proportionate frameworks that avoid duplication while enabling innovation, particularly in light of expanding AI use cases and global supply chains. Together, these developments reflect a broader trend toward risk-based, innovation-friendly regulation, coupled with increasing expectations around transparency, accountability, and data protection in digital health. </p> <h2>U.S. News</h2> <h3><a name="Health Care Fraud And Abuse Updates">Health Care Fraud And Abuse Updates</a></h3> <p><strong><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/three-members-international-criminal-organization-sentenced-lengthy-sentences-2-billion" target="_blank">Three Members of International Criminal Organization Sentenced for Telemedicine Health Care Fraud Scheme</a></strong>. On May 19, 2026, three defendants were sentenced for their role in a telemedicine fraud scheme. Between 2017 and 2022, the defendants allegedly operated domestic and international call centers that contacted patients enrolled with private insurers and offered them medications at no cost and without any medical evaluation. Regardless of whether beneficiaries agreed to receive medication, the defendants allegedly generated fraudulent prescriptions in their names. Allegedly, the defendants also recruited physicians purportedly to review prescriptions following telemedicine visits, but in most cases no such visits ever occurred. Prescriptions were generated under those physicians&rsquo; names and provider identification numbers without their knowledge, and many beneficiaries never actually received the medications. As a result, the defendants submitted over $1.97 billion in fraudulent prescriptions, of which private insurers paid $758 million.&nbsp;</p> <p><strong><a rel="noopener noreferrer" href="https://www.justice.gov/usao-ma/pr/illinois-doctor-agrees-pay-62500-signing-false-orders-durable-medical-equipment-scheme" target="_blank">Illinois Doctor Agrees to Pay $62,500 to Resolve False Medicare Claims Allegations</a></strong>. On May 19, 2026, an Illinois-based physician, Dr. Alexandria Williams, agreed to pay $62,500 to resolve civil allegations that she caused the submission of false Medicare claims for medically unnecessary DME. The government alleged that Dr. Williams signed pre-populated DME orders generated from telemarketing calls to Medicare beneficiaries. Those orders allegedly contained false certifications, including that she had evaluated the patient, discussed orthotic use, and provided follow-up care instructions, none of which occurred. She allegedly received payment per signed order through a telemedicine company whose owner had previously pleaded guilty to his role in the scheme.</p> <p><strong><a rel="noopener noreferrer" href="https://www.justice.gov/opa/pr/owner-health-care-software-company-convicted-1-billion-dollar-medicare-fraud-conspiracy" target="_blank">Federal Jury Convicts Health Care Software CEO in $1 Billion Medicare Fraud Scheme</a></strong>. On May 14, 2026, a federal jury convicted Brett Blackman, founder and owner of HealthSplash, for his role in operating DMERx, a platform that generated false physicians&rsquo; orders and prescriptions for Medicare and other federal health care benefit program reimbursements. The scheme allegedly involved aggressively targeting hundreds of thousands of Medicare beneficiaries, typically through foreign call centers and mass mailers, to accept medically unnecessary orthotic braces and other items. Telemedicine physicians were then paid illegal kickbacks to sign false prescription orders, in some cases without any patient interaction. Fraudulent orders falsely represented that the physician had examined the patient and performed in-person tests.&nbsp;</p> <p>In total, the scheme billed Medicare and other federal health care programs over $1 billion, of which Medicare and other insurers paid more than $450 million. We previously discussed the conviction of Blackman&rsquo;s co-conspirator in our <a href="/en/perspectives/publications/2025/06/virtual-and-digital-health-digest">June 2025 Digest</a>.</p> <h3><a name="Privacy and AI Updates">Privacy and AI Updates</a></h3> <p><strong>House Subcommittee Debates Proposed Federal Privacy Legislation</strong>. On June 3, 2026, a Subcommittee of the House Energy and Commerce Committee held a hearing on the proposed <a rel="noopener noreferrer" href="https://www.congress.gov/bill/119th-congress/house-bill/8413/text?s=1&amp;r=2" target="_blank">SECURE Data Act</a>, which was introduced in April and would establish national data privacy and security standards that would preempt any related state laws. At the hearing, Republican members of the subcommittee, as well as Ashli Watts, President and CEO of the Kentucky Chamber of Commerce, voiced strong support for the bill, emphasizing that it incorporates the fundamental elements of almost all of the more than 20 state privacy laws that have been enacted in the past decade while creating uniform standards for businesses nationwide. The bill drew sharp criticism from committee Democrats, however, and from Caitriona Fitzgerald, Deputy Director and Policy Director at the Electronic Privacy Information Center, who testified that the technology industry was pressing for enactment of the bill as a means to preempt the states from &ldquo;doing anything for all of time on privacy.&rdquo; Her testimony echoed statements made in a<a rel="noopener noreferrer" href="https://aboutblaw.com/blU5" target="_blank"> letter</a> sent the day of the hearing to both House and Senate leaders from the Attorneys General of 18 states. Although the SECURE Data Act will likely advance to a markup, its path ahead will not be smooth.</p> <p><strong>Mayo Clinic and Microsoft Announce AI Collaboration</strong>. Also on June 2, 2026, the Mayo Clinic and Microsoft <a rel="noopener noreferrer" href="https://newsnetwork.mayoclinic.org/discussion/mayo-clinic-and-microsoft-collaborate-to-develop-a-frontier-ai-model-for-healthcare/" target="_blank">announced </a>that they have formed a strategic collaboration to develop and deploy a frontier AI model for use in health care. According to the announcement, the model will be designed to synthesize diverse clinical data in order to facilitate earlier diagnoses, more personalized treatment decisions, and better patient outcomes. It will initially be deployed within Mayo Clinic&rsquo;s clinical environment, where it can be periodically tested, refined, and improved through real-world use. The Mayo Clinic will maintain ownership of the model, and Microsoft will make it globally available through Azure Foundry APIs. </p> <h3><a name="Policy Updates">Policy Updates</a></h3> <p>On May 19, 2026, a group of 20 Senate Democrats, led by Sen. Ron Wyden (D-OR), <a rel="noopener noreferrer" href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.finance.senate.gov%2Franking-members-news%2Fwyden-senate-democrats-take-action-to-roll-back-trump-ai-care-denial-experiment-on-seniors&amp;data=05%7C02%7CMickayla.Stogsdill%40arnoldporter.com%7C3e7583bf704f4e968e6108dec668a307%7Cd22d141fae37447facfa2e1d0e5b4969%7C0%7C0%7C639166349897091039%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&amp;sdata=MIZnxCVPu3JooV2w0106ZTejE9Pdv9JyawxHTHAFCno%3D&amp;reserved=0" target="_blank">introduced</a> a joint resolution (<a rel="noopener noreferrer" href="https://www.congress.gov/bill/119th-congress/senate-joint-resolution/192" target="_blank">S.J.Res. 192</a>) that would provide for congressional disapproval of the rule submitted to the CMS related to the implementation of AI-enabled prior authorization for select services under the<a rel="noopener noreferrer" href="https://www.cms.gov/priorities/innovation/innovation-models/wiser" target="_blank"> WISeR </a>model. Reps. Greg Landsman (D-OH) and Suzan DelBene (D-WA) introduced an identical joint resolution (<a rel="noopener noreferrer" href="https://www.congress.gov/bill/119th-congress/house-joint-resolution/187" target="_blank">H.J.Res. 187</a>) in the House.&nbsp;</p> <ul> <li>The introduction of the resolutions follows the Government Accountability Office&rsquo;s (GAO) recent <a rel="noopener noreferrer" href="https://www.gao.gov/products/b-337994" target="_blank">determination</a> that the WISeR model should be subject to the rulemaking requirements of the Congressional Review Act (CRA). Under the CRA, a joint resolution of disapproval passed by both chambers of Congress and signed by the president will invalidate a final rule issued by a federal agency. The enactment of a joint resolution of disapproval also prevents the reissuing of any rule that is &ldquo;substantially the same in nature.&rdquo;</li> <li>CMS Administrator Mehmet Oz <a rel="noopener noreferrer" href="https://aboutbgov.com/blKJ?utm_campaign=health_tech&amp;utm_medium=email&amp;_hsenc=p2ANqtz-9P7qWGWUokMCr52n1qhltpo-c01Qpbd-fcq-CJKJqsBaxhzSUTPrslSaAEKylubSUaZtjV3TiCGvnu5FHF09d1bi7HvVdpN9H8g-r7MGVniUZbF6o&amp;_hsmi=419421341&amp;utm_content=419421341&amp;utm_source=hs_email" target="_blank">shared</a> that CMS plans to implement a &ldquo;Gold Card&rdquo; program for WISeR as soon as mid-year, which will exempt &ldquo;high performing&rdquo; providers from review under the program.</li> </ul> <p>On June 2, 2026, the White House released its delayed <a rel="noopener noreferrer" href="https://www.whitehouse.gov/presidential-actions/2026/06/promoting-advanced-artificial-intelligence-innovation-and-security/" target="_blank">Executive Order</a> (EO), &ldquo;Promoting Advanced Artificial Intelligence Innovation and Security,&rdquo; to address AI cybersecurity threats. The finalized EO is a scaled-back version of the draft circulated in late May. The EO would seek to improve cybersecurity and secure critical systems across the government. Additionally, the order asks AI companies to enter their frontier models into a voluntary government review program 30 days prior to public release. The previous version of the order asked developers to submit 90 days prior to release.</p> <p>On June 3, 2026, OpenAI CEO Sam Altman met with congressional leaders, including Speaker Mike Johnson (R-LA), to discuss OpenAI&rsquo;s new <a rel="noopener noreferrer" href="https://cdn.openai.com/pdf/25752ecb-0e5c-47f9-b9e4-c0f4d76f8d3d/a-blueprint-for-a-federal-framework.pdf" target="_blank">policy blueprint</a> and a new discussion draft of the Great American AI Act (GAAIA, <a rel="noopener noreferrer" href="https://trahan.house.gov/uploadedfiles/gaaia_discussion_draft_section-by-section.pdf" target="_blank">section-by-section</a>, <a rel="noopener noreferrer" href="https://trahan.house.gov/uploadedfiles/2026.06.03_trahan_obernolte_ai_framework_faq.pdf" target="_blank">FAQs</a>) released by Reps. Jay Obernolte (R-CA) and Lori Trahan (D-MA). The 269-page bill is a comprehensive AI legislative framework and includes new guardrails for AI developers and would preempt state AI laws related to AI development for three years. The new safety provisions include the creation of the Center for AI Standards and Innovation (CAISI) at the U.S. Department of Commerce to set voluntary standards, develop evaluation tools, monitor AI progress, and run an accreditation system for Independent Verification Organizations (IVOs). It would also require large frontier model developers with revenue greater than $500 million to publish frameworks outlining their risk mitigation plans for their models and submit to compliance audits from the IVOs accredited by CAISI. Notably, the audit requirement would also expire in three years.</p> <h3><a name="FDA Updates">FDA Updates</a></h3> <h4>FDA Extends Comment Period for AI-Enabled Early-Phase Clinical Trials Pilot RFI</h4> <p>FDA has extended the comment period for its <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/05/28/2026-10602/ai-enabled-optimization-of-early-phase-clinical-trials-pilot-program-request-for-information" target="_blank">Request for Information</a> (RFI) on a proposed AI-Enabled Optimization of Early-Phase Clinical Trials Pilot Program. Comments are now due June 29, 2026, 30 days after the original May 29 deadline. The <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/04/29/2026-08281/ai-enabled-optimization-of-early-phase-clinical-trials-pilot-program-request-for-information" target="_blank">RFI</a> seeks input on how AI-enabled technologies could improve efficiency, safety monitoring, dose selection, adaptive trial design, biomarker assessment, patient recruitment and stratification, endpoint validation, and early Phase 1-to-Phase 2 go/no-go decision-making in early-phase clinical trials. FDA describes early-phase trials as a bottleneck in drug development due to uncertainty around dosing, safety, and efficacy; limited patient populations; inefficient progression decisions; long timelines; and significant resource demands. The proposed pilot would involve sponsors pursuing early-phase trials through applications submitted to CDER, CBER, and the Oncology Center of Excellence, and would be coordinated by the Deputy Chief Medical Officer within the Office of the Commissioner. FDA is seeking feedback on pilot design, participant selection, collaboration models, operational infrastructure, timelines, knowledge sharing, and evaluation metrics. FDA also emphasizes that the pilot would be guided by trustworthy AI principles aligned with the NIST AI Risk Management Framework, including validity, safety, security, accountability, explainability, privacy protection, and fairness. Comments should reference Docket No. FDA-2026-N-4390.</p> <h4>FDA Classifies Radiological Machine Learning-Based Quantitative Imaging Software With PCCP as Class II Device</h4> <p>FDA has issued a <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/06/17/2026-12166/medical-devices-radiology-devices-classification-of-the-radiological-machine-learning-based" target="_blank">final order</a> classifying radiological machine learning-based quantitative imaging software with a predetermined change control plan (PCCP) as a Class II device subject to special controls. The order takes effect on June 17, 2026.</p> <p>The device type covers software-only products that use machine learning algorithms on radiological images to produce quantitative imaging outputs, including functions such as view selection, segmentation, and landmarking. The classification also addresses planned software modifications made under an authorized PCCP.</p> <p>FDA classified the device type through the De Novo pathway after reviewing Caption Health, Inc.&rsquo;s request for its Caption Interpretation Automated Ejection Fraction Software. FDA concluded that special controls, together with general controls, provide reasonable assurance of safety and effectiveness while reducing the regulatory burden compared with automatic Class III classification.</p> <p>The special controls address risks such as inaccurate outputs, inaccurate results following PCCP-authorized modifications, and user misunderstanding of software changes. They require detailed documentation of algorithms and training data, independent performance testing, subgroup analyses, software verification and validation, risk management for planned modifications, and labeling that describes the device&rsquo;s validated population, intended users, inputs and outputs, compatible imaging hardware and protocols, performance, limitations, PCCP status, version history, and user notification process.</p> <p>The device type remains subject to 510(k) premarket notification requirements, and the new De Novo classification may serve as a predicate for future substantially equivalent devices.</p> <h4>FDA Updates Lists of Authorized Medical Devices Incorporating Digital Health Technologies</h4> <p>FDA has updated its searchable lists of medical devices authorized for marketing in the United States that incorporate certain digital health technologies, including artificial intelligence (AI), augmented reality and virtual reality (AR/VR), and sensor-based digital health technologies. The lists are intended to provide transparency into the landscape of FDA-authorized digital health-enabled devices and may help developers, providers, patients, and other stakeholders understand how these technologies are used in regulated medical devices. The updated list now includes more than 1,500 AI/ML devices.</p> <h2>EU and UK News</h2> <h3><a name="Regulatory Updates">Regulatory Updates</a></h3> <p><a rel="noopener noreferrer" href="https://ec.europa.eu/newsroom/sante/newsletter-archives/74172" target="_blank"></a><strong><a href="https://data.consilium.europa.eu/doc/document/ST-9247-2026-INIT/en/pdf" target="_blank">Council of the European Union (Council) and European Parliament Reach Provisional Agreement on the Revised EU AI Rules</a></strong>. On May 7, 2026, the Council and European Parliament reached a provisional political agreement on the EU AI Act component of the EU Digital Omnibus package, which aims to simplify the implementation of harmonized rules on AI under the EU AI Act (see our <a href="/en/perspectives/publications/2026/04/virtual-digital-health-digest">April 2026 Digest</a>&nbsp;and our <a href="/en/perspectives/advisories/2026/02/eu-digital-omnibus-what-the-proposed-reforms-mean-for-pharma-and-medtech">February 2026 Advisory </a>for more details on the EU Digital Omnibus). The agreement would postpone the application of obligations on high-risk AI until December 2, 2027 for standalone high-risk AI systems and until August 2, 2028 for high-risk AI systems embedded in products subject to EU sectoral legislation, including medical devices and in-vitro diagnostics (IVDs). The agreement also introduces measures intended to reduce overlaps between the AI Act and sector-specific legislation, narrows the definition of &ldquo;safety component&rdquo; potentially limiting the scope of certain high-risk obligations, and introduces more proportionate requirements for small and medium enterprises (SMEs) and small mid-cap enterprises. The text remains subject to formal adoption by both institutions before entering into force. Read our <a rel="noopener noreferrer" href="https://www.biosliceblog.com/2026/05/eu-ai-act-omnibus-provisional-deal-announced-initial-reflections-for-life-sciences-companies/" target="_blank">May 2026 BioSlice Blog</a> for more details on the agreement.</p> <p><strong><a rel="noopener noreferrer" href="https://www.gov.uk/government/calls-for-evidence/pre-market-medical-devices-regulation-stakeholder-impact-survey" target="_blank">MHRA&rsquo;s Call for Evidence on Draft Pre-Market Medical Devices Regulation</a></strong>. The MHRA launched a call for evidence in the form of a stakeholder impact survey on newly proposed changes to UK legislation on pre-market medical device and IVD requirements, as set out in the <a rel="noopener noreferrer" href="https://members.wto.org/crnattachments/2026/TBT/GBR/26_02425_00_e.pdf" target="_blank">draft Medical Devices (Amendment) Regulations 2026</a>. The survey closed on June 19, 2026 and is intended to inform the government&rsquo;s future implementation of these reforms, which aim to introduce more proportionate, patient‑centered requirements while supporting access to innovative technologies. In particular, the proposals integrate software within the broader active device classification rules (rather than there being a designated classification rule on software as there currently is within the EU rules), propose additional Unique Device Identification requirements for software, and introduce the concept of &ldquo;pre-determined change control plans&rdquo; as a mechanism to describe future modifications to devices, including for software, and how they will be assessed. Read about some of the key proposals in our recent <a rel="noopener noreferrer" href="https://www.biosliceblog.com/2026/05/draft-uk-medical-device-amending-regulations-key-proposals-and-mhra-call-for-evidence/" target="_blank">May 2026 BioSlice Blog</a>.&nbsp;</p> <p><strong><a rel="noopener noreferrer" href="https://ec.europa.eu/newsroom/sante/newsletter-archives/75676" target="_blank">EUDAMED Registration Obligations Become Applicable</a></strong>. On May 28, 2026, four of the six modules of the EUDAMED, the EU centralized database for medical devices and in vitro diagnostics, became mandatory. This triggered the application of certain transparency and registration obligations under the MDR and IVDR that had been deferred until those modules became mandatory. In particular, manufacturers (including non-EU manufacturers), importers, and EU authorized representatives are now required to register in EUDAMED, obtain a Single Registration Number (SRN), and register their devices in EUDAMED before placing them on the EU market. Devices already placed on the market before May 28 must be registered in EUDAMED by November 27, 2026. In addition, notified bodies are now required to upload certificate information to EUDAMED, and EU Member States must conduct certain market surveillance activities through EUDAMED. Read our <a rel="noopener noreferrer" href="https://www.biosliceblog.com/2025/11/new-medical-device-and-ivd-registration-and-transparency-requirements-to-apply-in-2026/" target="_blank">May 2026 BioSlice Blog</a> for more details on the obligations.</p> <p><a rel="noopener noreferrer" href="https://www.team-nb.org/artificial-intelligence-council-parliament-agree-to-simplify-and-streamline-rules/" target="_blank"><strong>Team-NB Publishes Statement on Provisional Agreement Reached by the Council and European Parliament on the Revised EU AI Rules</strong></a>. Team-NB (the European association of notified bodies) clarified in their statement that the provisional agreement reached between the institutions does not alter the integrated conformity assessment procedure for AI-enabled medical devices under the AI Act, and that AI Act requirements would remain directly applicable to AI-enabled medical devices and IVDs alongside the MDR and the IVDR. Additionally, Team-NB raised concerns that the extended timelines for high risk AI obligations may be insufficient to allow for the designation of AI notified bodies and completion of conformity assessments. Team-NB further warned that delays in the adoption of implementing measures and harmonized standards could create capacity constraints and lead to inconsistent implementation of the AI Act across EU Member States for AI-enabled medical devices and IVDs.</p> <p><strong><a rel="noopener noreferrer" href="https://www.medtecheurope.org/2026/05/05/mdr-ivdr-revision-building-a-simpler-more-predictable-framework-for-patient-access-and-innovation/" target="_blank">MedTech Europe Publishes Position Paper on the Revisions of the EU MDR/IVDR</a></strong>. In its position paper, MedTech Europe sets out that it broadly supports the proposed revisions to the MDR and IVDR, particularly the focus on simplification, risk-based oversight, and international cooperation. It also identifies several areas where further changes are needed, including a clear implementation process for integrating AI requirements into MDR and IVDR conformity assessment procedures and for consistent oversight of AI-enabled medical technologies within existing medical device market surveillance systems. In relation to software as a medical device, MedTech Europe supports the proposed amendments to the classification rules that would allow certain lower-risk software devices to remain classified as Class I. Read our <a rel="noopener noreferrer" href="https://www.biosliceblog.com/2025/12/from-complexity-to-clarity-how-the-eu-commission-plans-to-overhaul-the-mdr-and-ivdr/" target="_blank">December 2025 BioSlice Blog</a> and our <a href="/en/perspectives/advisories/2026/02/the-eu-medical-device-shake-up">February 2026 Advisory</a>&nbsp;for more details on the Commission&rsquo;s proposals.</p> <p><strong><a rel="noopener noreferrer" href="https://www.cocir.org/position/targeted-revision-of-eu-mdr-rule-11-for-medical-device-software/" target="_blank">COCIR position paper on revisions to software medical device classification</a></strong>. COCIR, the European Trade Association representing the medical imaging, radiotherapy, health ICT, and electromedical industries, has published a position paper on the Commission&rsquo;s proposal to revise MDR Rule 11 on the classification of medical device software. COCIR warns that several key terms remain too open to interpretation. In particular, it argues that the distinction between &ldquo;informing&rdquo; and &ldquo;driving&rdquo; clinical management in the proposal is unstable. The paper proposes alternative wording that it says addresses the challenges with the Commission&rsquo;s proposals. COCIR suggests removing the words &ldquo;confer a clinical benefit&rdquo; from Rule 11, referring instead to whether the software is intended to &ldquo;diagnose or treat patients without healthcare professional oversight.&rdquo; It says the advantage of using health care professional oversight as a classification criterion is that it can be practically assessed, and it collapses the &ldquo;semantically fragile &lsquo;inform/drive&rsquo; dichotomy&rdquo; in the current proposal.&nbsp;</p> <p><strong>UK&rsquo;s MHRA and National AI Commission Share Views on the Regulation of AI in Health Care</strong>. In a webinar on May 20, 2026, the two agencies outlined emerging views on a UK framework for regulating AI in health care. The discussion emphasized that AI challenges traditional medicines regulation given faster development, lower barriers to entry, and continuously evolving systems, and will require a more flexible regulatory framework with greater emphasis on post‑market monitoring and proportionate controls at market entry. Stakeholder engagement has highlighted four core priorities: ensuring safety and oversight; distinguishing between lower‑risk administrative uses and higher‑risk clinical applications; improving transparency and patient awareness; and establishing ongoing monitoring with clear accountability. The <a rel="noopener noreferrer" href="https://www.gov.uk/government/groups/national-commission-into-the-regulation-of-ai-in-healthcare" target="_blank">National AI Commission</a>&lsquo;s recommendations are expected in autumn 2026, alongside further MHRA guidance on AI as a medical device.&nbsp;</p> <p><strong><a rel="noopener noreferrer" href="https://www.hra.nhs.uk/planning-and-improving-research/policies-standards-legislation/plan-to-enable-safe-ai-powered-innovation-in-health-and-social-care-research/" target="_blank">UK&rsquo;s HRA Publishes Two‑Year Plan for Safe Use of AI in Health Research</a></strong>. The UK Health Research Authority (HRA) has published a new two-year plan on how it will help researchers use AI and new technologies to improve patient care. The plan is structured around three priorities: (1) being clear where AI development, evaluation and implementation activities qualify as research, (2) clarifying the circumstances in which health information can be accessed using AI-enabled and data driven approaches to identify and contact people about research options relevant to them, and (3) taking action to ensure that review of AI-enabled and data-driven research is appropriately informed, rigorous and consistent. Each of these priority areas is supported by workstreams with certain deliverables; for example, the HRA intends to update, as first priority, the &lsquo;is my study research&rsquo; decision tool and supporting guidance that defines when AI activity is research. The HRA says these changes will make it simpler and faster to do health and social care research enabled by safe, AI-powered innovation.&nbsp;</p> <p><strong><a rel="noopener noreferrer" href="https://standardsdevelopment.bsigroup.com/projects/9026-13652" target="_blank">UK Consultation on New Standard for Digital Mental Health Technologies</a></strong>. The MHRA has sponsored the British Standards Institution (BSI) to develop a new standard for digital mental health technologies. The BSI has now launched a consultation on the draft standard, which provides recommendations for performing studies to generate clinical evidence involving digital mental health technologies. The standard applies to the pre-market phase and real-world data in the early implementation post-market phase. It covers factors such as controls, sample characteristics, safety, effectiveness, engagement end points, and follow-up periods. The consultation is open until June 29, 2026.</p> <p><strong><a rel="noopener noreferrer" href="https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:62024CJ0604" target="_blank">Court of Justice of the European Union (CJEU) Rules on the Prohibition of Online Pharmacy Sales</a></strong>. The CJEU has delivered a preliminary ruling in the case <em>FARMAKEIO YZ &amp; SIA O.E. v. Ypourgos Anaptyxis kai Ependyseon and Ypourgos Ygeias</em>. (C 604/24), clarifying the limits of EU Member States&rsquo; discretion to restrict online sales of non prescription medicines under Article 85c of Directive 2001/83/EC. The case arose from Greek rules which, in practice, limited online sales of medicines to a narrow subcategory of over-the-counter medicinal products, effectively excluding most non prescription medicinal products. The CJEU held that such a restriction is incompatible with Article 85c(1) of Directive 2001/83/EC, which requires EU Member States to permit distance sales of non prescription medicinal products by authorized pharmacies, and the rules cannot be justified under Article 85c(2) on public health grounds because the conditions deprived Article 85(c)(1) of its effectiveness. The CJEU held that EU Member States may make a specific category of non-prescription medicinal products subject to conditions (for example, on account of their particular therapeutic characteristics) but only insofar as those conditions do not call into question the possibility of offering those medicinal products for sale.</p> <p><strong><a rel="noopener noreferrer" href="https://www.edqm.eu/en/-/new-council-of-europe-recommendation-sets-standards-for-remote-and-online-medicine-provision" target="_blank">Council of Europe Committee of Ministers Adopts Recommendation CM/Rec(2026)7 on the Remote and Online Provision of Medicine Products</a></strong>. The recommendation sets out best practices for remote and online providers of medicinal products, non-pharmacy outlets (i.e., any retail business that is authorized to sell approved non-prescription medicinal products), EU Member States, and health care professional regulatory and representative bodies. Among other measures, it recommends that remote and online providers ensure that automated medicine-selection processes, including those using AI, be evaluated against relevant standards, regularly updated, and designed to ensure patient safety. It also recommends that non-pharmacy outlets take account of the limitations of the communication channels used when designing and delivering their services. While non-binding, the recommendation serves as a framework for EU Member States to consider and implement through national policies, legislation, and regulatory practice.</p> <h3><a name="Privacy Updates">Privacy Updates</a></h3> <p><a rel="noopener noreferrer" href="https://www.edpb.europa.eu/system/files/2026-04/edpb_guidelines_202601_scientificresearch_en.pdf" target="_blank"></a><strong><a href="https://www.medtecheurope.org/resource-library/cybersecurity-act-revision-medtech-europes-response-to-the-public-consultation/" target="_blank">MedTech Europe Publishes Feedback on the European Commission Consultation on Revised EU Cybersecurity Act</a></strong>. While broadly supporting the revision of the EU Cybersecurity Act, MedTech Europe calls for a more coherent and proportionate framework tailored to highly regulated sectors such as health care. In particular, they emphasized that, while strengthening the EU cybersecurity resilience is critical, any revised regime should avoid regulatory fragmentation and overlapping cybersecurity requirements for medical devices already regulated under the MDR and IVDR, while remaining practical for industry to implement. Given that medical technologies often rely on globally integrated supply chains (e.g., for software modules), MedTech Europe also called to prioritize international recognition of voluntary cybersecurity certification schemes and for the centralized EU-level publication of cybersecurity certification schemes to reduce fragmentation. Read our<a href="/en/perspectives/publications/2026/02/virtual-and-digital-health-digest"> January 2026 Digest</a> for more details on the Commission proposal.</p> <p><strong><a rel="noopener noreferrer" href="https://www.medtecheurope.org/wp-content/uploads/2026/05/20260526_joint-industry-statement-on-digital-omnibus.pdf" target="_blank">MedTech Europe and Other Industry Associations Urge EU Member States to Preserve the Ambition of the Digital Omnibus</a></strong>. Following the publication of the Council&rsquo;s compromise texts on the Digital Omnibus, a coalition of industry associations, including MedTech Europe, expressed concerns that the direction of ongoing Council negotiations could undermine key simplification measures proposed by the European Commission as part of the Digital Omnibus in relation to the General Data Protection Regulation (GDPR), cybersecurity incident reporting, cookies, and the Data Act. In particular, the joint statement calls to maintain the Commission&rsquo;s targeted amendments to the GDPR (including more workable conditions for the use of personal data for AI and an innovation-enabling definition of scientific research), support for an EU-wide single-entry point for cyber incident reporting, and a more innovation-friendly approach to data and cookie rules. The joint statement notes that certain elements of the Council&rsquo;s compromise texts risk weakening the proposal&rsquo;s simplification objectives and urges Member States to preserve the ambition of the Digital Omnibus as discussions on the Council&rsquo;s position continue.</p> <p><strong><a rel="noopener noreferrer" href="https://ico.org.uk/about-the-ico/media-centre/news-and-blogs/2026/05/one-month-to-go-what-businesses-need-to-know-to-meet-new-data-law/" target="_blank">DUAA Data Protection Complaints Requirement Takes Effect in UK</a></strong>. On June 19, 2026, the data protection complaints handling requirement introduced by the Data (Use and Access) Act 2025 (DUAA) came into force (read our <a href="/en/perspectives/advisories/2026/02/ico-publishes-guidance-on-how-to-deal-with-data-protection-complaints">February&nbsp;2026 Advisory</a>&nbsp;for more details). From that date, all controllers must have a process in place to handle data protection complaints from anyone who is unhappy with how their personal information has been handled. Controllers must provide a way for people to make complaints directly to them; for example, via an electronic complaints form or a dedicated email address, and must acknowledge complaints within 30 days and respond without undue delay. This is the last major data protection provision of the DUAA to come into force, with most of the remaining provisions having commenced on February 5, 2026. The ICO updated its <a rel="noopener noreferrer" href="https://ico.org.uk/for-organisations/how-to-deal-with-data-protection-complaints/" target="_blank">guidance on handling data protection complaints</a> on May 8, 2026. Any business processing personal data in the UK that does not already have a formal complaints process in place should treat this as an immediate priority.</p> <p><strong><a rel="noopener noreferrer" href="https://ico.org.uk/about-the-ico/ico-and-stakeholder-consultations/2026/03/ico-consultation-on-the-draft-guidance-about-automated-decision-making-including-profiling/" target="_blank">UK&rsquo;s ICO Consults on Draft Guidance on Automated Decision-Making</a></strong>. The ICO consultation on draft guidance about automated decision-making (ADM) closed on May 29, 2026. This serves to update existing guidance on automated decision-making and profiling, following the introduction of the Data (Use and Access) Act 2025. The draft guidance identifies three points when organizations must provide information about their ADM activities: when they first collect personal data; when individuals make a subject access request; and when they engage in ADM. It also notes the likely need to conduct a data protection impact assessment when engaging in ADM and emphasizes the importance of adequate mechanisms for diagnosing quality issues. Final guidance is expected in Summer 2026 and is directly relevant to life sciences companies deploying AI-enabled tools in clinical, diagnostic, or patient-facing contexts.</p> <p><strong><a rel="noopener noreferrer" href="https://www.edps.europa.eu/data-protection/our-work/publications/annual-reports/2026-05-07-annual-report-2025-protecting-people-changing-digital-world_en" target="_blank">European Data Protection Supervisor (EDPS) Publishes Its 2025 Annual Report</a></strong>. The Annual Report highlights a year of increased regulatory activity, particularly in the area of AI. This includes the establishment of a dedicated AI Unit, which will serve as the market surveillance authority and notified body of the EU&rsquo;s AI systems under the AI Act, the launch of an AI regulatory sandbox pilot project, and more scrutiny of international data transfers and large-scale IT systems. The report notes the growing regulatory focus on AI and data‑driven technologies, signaling heightened expectations around compliance, governance, and the handling of sensitive health data.&nbsp;</p> <h3><a name="IP Updates">IP Updates</a></h3> <p><strong><span style="text-decoration: underline;">The UK Government Responds to House of Lords&rsquo; Report on Copyright and AI</span></strong>. On May 15, 2026, the UK government published its <a rel="noopener noreferrer" href="https://committees.parliament.uk/publications/53047/documents/296552/default/" target="_blank">formal response</a> to the House of Lords Communications and Digital Committee&rsquo;s (CDC) <a rel="noopener noreferrer" href="https://publications.parliament.uk/pa/ld5901/ldselect/ldcomm/267/267.pdf" target="_blank">report</a> on copyright and AI and the UK government&rsquo;s earlier<a rel="noopener noreferrer" href="https://assets.publishing.service.gov.uk/media/69ba692226909a14239612e4/CP2602959_-_Report_on_Copyright_and_Artificial_Intelligence_web.pdf" target="_blank"> report </a>and impact assessment (see our <a rel="noopener noreferrer" href="https://www.biosliceblog.com/2026/05/virtual-and-digital-health-digest-april-2026/" target="_blank">April 2026 Digest</a>). While the response largely reiterates the government&rsquo;s existing position, it identifies four areas of near-term focus:</p> <ul> <li><strong>Digital replicas</strong>: The government will launch a consultation this summer on protecting individuals against unauthorized digital replicas, recognizing that existing legal routes, including &ldquo;passing off,&rdquo; may offer limited protection, particularly for lesser-known artists.</li> <li><strong>Labeling</strong>: <strong>A task force will be established to develop best practice proposals for labeling</strong> AI-generated content, with an interim report expected in autumn 2026. The government acknowledges that voluntary measures alone may be insufficient.</li> <li><strong>Transparency</strong>: The government will publish a review of mechanisms enabling creators to control the online use of their works, including standards, technical solutions and best practice transparency, with a view to identifying regulatory gaps.&nbsp;</li> <li><strong>Licensing support</strong>: A working group will consider whether additional government assistance is needed to support smaller creative organizations in licensing their content and securing fair remuneration.</li> </ul> <p>On the broader question of copyright reform, the government reiterates that it will not introduce legislative change unless it is confident that reform would deliver tangible economic and societal benefits. It also stops short of definitively ruling out a broad text and data mining exception, despite the CDC&rsquo;s recommendation to do so.</p> <p><span style="font-size: small;"><em>Kuran Phull&nbsp;is employed as a trainee solicitor at Arnold &amp; Porter&rsquo;s London office. Amalia is not admitted to the practice of law.<br /> </em></span></p> <p><span style="font-size: small;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{4E6A10E7-D190-41B1-A7AF-6DEB6F85910D}https://globalcompetitionreview.com/hub/class-actions-hub/2025/article/caught-in-cost-benefit-analysis-cat-refuses-certification-in-salmon-collective-proceedings-behalf-of-consumersNicola Chesaiteshttps://www.arnoldporter.com/en/people/c/chesaites-nicolanicola.chesaites@arnoldporter.comNaina Guptahttps://www.arnoldporter.com/en/people/g/gupta-nainanaina.gupta@arnoldporter.comAlastair Brownhttps://www.arnoldporter.com/en/people/b/brown-alastairalastair.brown@arnoldporter.com Mon, 29 Jun 2026 00:00:00 -0500{A363CC8F-06A7-4C99-AEF5-55C73D1F3773}https://globalcompetitionreview.com/hub/class-actions-hub/2025/article/cat-rules-against-class-representative-in-rail-boundary-fare-case-alleging-abuse-of-dominanceAlastair Brownhttps://www.arnoldporter.com/en/people/b/brown-alastairalastair.brown@arnoldporter.com Samuel Miluckyhttps://www.arnoldporter.com/en/people/m/milucky-samuelsamuel.milucky@arnoldporter.comNaina Guptahttps://www.arnoldporter.com/en/people/g/gupta-nainanaina.gupta@arnoldporter.comMon, 29 Jun 2026 00:00:00 -0500{5EE682B8-59EA-43CA-B674-0693623484DC}https://globalcompetitionreview.com/hub/class-actions-hub/2025/article/supreme-court-provides-welcome-guidance-collective-proceedings-cat-and-court-of-appeal-oddsNaina Guptahttps://www.arnoldporter.com/en/people/g/gupta-nainanaina.gupta@arnoldporter.comSamuel Miluckyhttps://www.arnoldporter.com/en/people/m/milucky-samuelsamuel.milucky@arnoldporter.comAlastair Brownhttps://www.arnoldporter.com/en/people/b/brown-alastairalastair.brown@arnoldporter.com Mon, 29 Jun 2026 00:00:00 -0500{D093E4F5-83A7-46B0-911E-538647D22114}https://www.arnoldporter.com/en/perspectives/events/2026/06/staying-current-on-payments-for-consumer-products-retail-companiesMeredith Osbornhttps://www.arnoldporter.com/en/people/o/osborn-meredithmeredith.osborn@arnoldporter.comChristopher L. Allenhttps://www.arnoldporter.com/en/people/a/allen-christopher-lChristopher.Allen@arnoldporter.comJoin Arnold &amp; Porter&rsquo;s Consumer Products &amp; Retail industry group for the next program in our Consumer Products &amp; Retail Navigator webinar series, focused on the latest legislative and regulatory developments shaping payments for consumer products and retail companies.Thu, 25 Jun 2026 00:00:00 -0500<p>Join Arnold &amp; Porter&rsquo;s Consumer Products &amp; Retail industry group for the next program in our Consumer Products &amp; Retail Navigator webinar series, focused on the latest legislative and regulatory developments shaping payments for consumer products and retail companies.</p> <p>New laws and enforcement activity are moving quickly across the payments landscape &mdash; from digital assets and buy now/pay later programs to gift card regulations and consumer protection requirements. Companies that sell to consumers or manage payment programs need to understand how these changes affect their compliance obligations and day-to-day business decisions.</p> <p>During our program, we will walk through what&rsquo;s changing in payments law and what to do about it, including:</p> <ul> <li>The GENIUS Act</li> <li>California&rsquo;s Digital Financial Assets Law</li> <li>Gift card regulations including updated California legal requirements</li> <li>New York&rsquo;s FAIR Act, containing significant changes to NY&rsquo;s consumer protection laws</li> <li>Legislative and enforcement developments in buy-now-pay-later</li> </ul>{C8B0A02E-A68E-4249-916D-82A90B42B02F}https://www.fdli.org/2026/06/fda-process-101-an-essential-toolkit-for-practicing-in-fda-regulated-products-areas/claire.dennis@arnoldporter.comThu, 25 Jun 2026 00:00:00 -0500{066622C6-3C9A-4781-9D28-0AF7BA3D50E3}https://www.arnoldporter.com/en/perspectives/events/2026/06/synapse-arnold-porters-pharma-law-day-2026Daniel A. Kracovhttps://www.arnoldporter.com/en/people/k/kracov-daniel-adaniel.kracov@arnoldporter.comGeorge Jenkinshttps://www.arnoldporter.com/en/people/j/jenkins-georgegeorge.jenkins@arnoldporter.comAlexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comAxel Gutermuthhttps://www.arnoldporter.com/en/people/g/gutermuth-axelaxel.gutermuth@arnoldporter.comNiels Christian Ersbøllhttps://www.arnoldporter.com/en/people/e/ersbll-niels-christianniels.ersboll@arnoldporter.comDr. Beatriz San Martinhttps://www.arnoldporter.com/en/people/s/san-martinbeatriz.sanmartin@arnoldporter.comJoin us on June 24 at The Circle in Z&uuml;rich for the second edition of Synapse, a focused day of discussion on the most consequential EU, UK and U.S. regulatory and enforcement developments in life sciences, designed for senior in-house counsel navigating complex strategic decisions.Wed, 24 Jun 2026 00:00:00 -0500<p>Join us on June 24 at The Circle in Z&uuml;rich for the second edition of Synapse, a focused day of discussion on the most consequential EU, UK and U.S. regulatory and enforcement developments in life sciences, designed for senior in-house counsel navigating complex strategic decisions.</p> <p>The programme brings together Arnold &amp; Porter's life sciences practitioners across Europe and the U.S., in a format built for substantive exchange and a practical and direct approach, addressing the regulatory and enforcement pressures that matter most to your business right now.</p> <p>We would be delighted to welcome you on June 24.</p>{C1343BC8-7050-4E7D-8D9C-5E7E7F3A4AB2}https://www.arnoldporter.com/en/perspectives/advisories/2026/06/irs-announces-interpretation-of-the-expanded-group-of-nonprofit-employees-subject-toDouglas S. Pelleyhttps://www.arnoldporter.com/en/people/p/pelley-douglas-sDouglas.Pelley@arnoldporter.comKathleen Wechterhttps://www.arnoldporter.com/en/people/w/wechter-kathleenkathleen.wechter@arnoldporter.comUnder Section 4960 of the Internal Revenue Code, a nonprofit organization is generally subject to a 21% excise tax on&nbsp; compensation paid to &ldquo;covered employees&rdquo; in excess of $1 million in any year (and on certain severance and similar &ldquo;parachute payments&rdquo; exceeding a defined threshold).&nbsp; Prior to the One Big Beautiful Bill (OBBB), &ldquo;covered employees&rdquo; were generally limited to (i) an organization&rsquo;s top-five most highly compensated employees for the taxable year, and (ii) anyone who was a &ldquo;covered employee&rdquo; in a prior taxable year.&nbsp;Wed, 24 Jun 2026 00:00:00 -0500<p>Under Section 4960 of the Internal Revenue Code, a nonprofit organization is generally subject to a 21% excise tax on compensation paid to &ldquo;covered employees&rdquo; in excess of $1 million in any year (and on certain severance and similar &ldquo;parachute payments&rdquo; exceeding a defined threshold). Prior to the One Big Beautiful Bill (OBBB), &ldquo;covered employees&rdquo; were generally limited to (i) an organization&rsquo;s top-five most highly compensated employees for the taxable year, and (ii) anyone who was a &ldquo;covered employee&rdquo; in a prior taxable year. Effective for 2026 and beyond, the OBBB enacted a significant expansion of the definition of &ldquo;covered employee&rdquo; to generally include all current and former employees since 2017.</p> <p>In Notice 2026-36 the IRS announced how it intends to interpret the changes made by the OBBB to the definition of a &ldquo;covered employee&rdquo; in proposed regulations, which are favorable to nonprofits. First, the IRS will take a narrow view of the OBBB lookback rule for the period from 2017 through 2025 for determining &ldquo;covered employees&rdquo; for 2026 and beyond. Rather than include as a &ldquo;covered employee&rdquo; anyone who was employed by the organization during that timeframe, as the language of the OBBB suggests, the IRS stated that for years 2017 through 2025 it will only include persons who would have qualified as &ldquo;covered employees&rdquo; during that period under pre-OBBB law (including pre-OBBB Treasury Regulations and its exceptions). Second, the IRS anticipates that the proposed regulations will carry over the existing regulatory exceptions for &ldquo;limited hours&rdquo; and &ldquo;nonexempt funds,&rdquo; but will not include the &ldquo;limited services&rdquo; exception (which is not expected to apply under the OBBB changes). </p> <p>The Notice states that taxpayers may rely on the interpretations set forth in the Notice until proposed regulations are issued. </p>{D1765DFB-55DD-4EA9-8C46-819E56F9C37F}https://www.fdli.org/2026/06/the-rise-of-big-food-litigation/jocelyn.wiesner@arnoldporter.comWed, 24 Jun 2026 00:00:00 -0500{AE65FCAC-1197-407B-93D7-25C0B871E74F}https://www.arnoldporter.com/en/perspectives/advisories/2026/06/fda-issues-revised-draft-guidance-on-demonstrating-substantial-evidence-of-effectivenessEva Temkinhttps://www.arnoldporter.com/en/people/t/temkin-evaeva.temkin@arnoldporter.comDaniel A. Kracovhttps://www.arnoldporter.com/en/people/k/kracov-daniel-adaniel.kracov@arnoldporter.comCatherine A. Brandonhttps://www.arnoldporter.com/en/people/b/brandon-catherine-aCatherine.Brandon@arnoldporter.comClaire W. Dennishttps://www.arnoldporter.com/en/people/d/dennis-claireclaire.dennis@arnoldporter.comJonathan Trinhhttps://www.arnoldporter.com/en/people/t/trinh-jonathanJonathan.Trinh@arnoldporter.comOn June 22, 2026, the U.S. Department of Health and Human Services (HHS) unveiled Operation TrialBlazer, a department-wide effort to accelerate clinical research and development centered in the United States. As part of that initiative, the U.S. Food and Drug Administration (FDA or the Agency) is taking multi-pronged actions to help facilitate early- and late-stage clinical development.Wed, 24 Jun 2026 00:00:00 -0500<p>On June 22, 2026, the U.S. Department of Health and Human Services (HHS) unveiled Operation TrialBlazer, a department-wide effort to accelerate clinical research and development centered in the United States.[[N: U.S. Dep&rsquo;t of Health &amp; Human Servs., <a rel="noopener noreferrer" href="https://www.hhs.gov/sites/default/files/operation-trialblazer.pdf" target="_blank"><em>Operation TrialBlazer</em></a> (June 2026); U.S. Dep&rsquo;t of Health &amp; Human Servs., Press Release, <a rel="noopener noreferrer" href="https://www.hhs.gov/press-room/hhs-launches-clinical-trials-reform-initiative.html" target="_blank"><em>HHS Launches Unprecedented Department-Wide Effort to Restore American Leadership in Clinical Trials</em></a> (June 22, 2026).&nbsp;]] As part of that initiative, the U.S. Food and Drug Administration (FDA or the Agency) is taking multi-pronged actions to help facilitate early- and late-stage clinical development, including:</p> <ol> <li>proposing a pilot program intended to reduce the start-up time for first-in-human (FIH) clinical trials (see <a href="/en/perspectives/advisories/2026/06/fda-proposes-expedited-investigational-new-drug-pilot-program">Arnold &amp; Porter&rsquo;s Advisory</a>);</li> <li>clarifying the chemistry, manufacturing, and controls (CMC) expectations for Investigational New Drug (IND) submissions to help sponsors efficiently generate and submit the phase-appropriate data needed to support phase 1 clinical trials; and</li> <li>issuing a significantly revised draft of FDA&rsquo;s critical Substantial Evidence Guidance, which sets out regulatory expectations for sponsors regarding the type and quantity of data and information necessary to meet the statutory standard for &ldquo;substantial evidence&rdquo; of effectiveness in support of a drug or biological product application, as discussed herein.[[N: Other FDA initiatives include adopting a risk-based approach toward nonclinical safety studies to relieve certain sponsors from conducting unnecessary animal testing, as well as evaluating strategies to minimize protocol amendments and ensure that protocol amendments do not delay clinical trials from continuing. <em>Operation TrialBlazer</em>, at 10-11 and 14; U.S. Food &amp; Drug Admin., <a rel="noopener noreferrer" href="https://www.fda.gov/industry/fda-actions-accelerate-and-modernize-early-and-late-stage-clinical-development" target="_blank"><em>FDA Actions to Accelerate and Modernize Early and Late Stage Clinical Development</em></a> (June 22, 2026); U.S. Food &amp; Drug Admin., <a rel="noopener noreferrer" href="https://www.fda.gov/drugs/investigational-new-drug-ind-application/ind-applications-clinical-investigations-chemistry-manufacturing-and-control-cmc-information" target="_blank"><em>IND Applications for Clinical Investigations: Chemistry, Manufacturing, and Control (CMC) Information</em></a> (updated June 22, 2026).&nbsp;]]</li> </ol> <p>The HHS Office of Inspector General is also evaluating whether to update the safe harbor regulations under the federal Anti-Kickback Statute, or the exceptions to the civil monetary penalty provision prohibiting inducements to beneficiaries to address remuneration provided to individuals in connection with their participation in clinical trials.[[N:&nbsp;HHS Launches Unprecedented Department-Wide Effort to Restore American Leadership in Clinical Trials; Medicare and State Health Care Programs: Fraud and Abuse; Request for Information Regarding the Federal Anti-Kickback Statute and Beneficiary Inducements CMP, 91 Fed. Reg. 37902, 37903 (June 24, 2026).]]</p> <p>FDA&rsquo;s revised draft guidance, Demonstrating Substantial Evidence of Effectiveness for Human Drug and Biological Products (the &ldquo;2026 Draft Substantial Evidence Guidance&rdquo;), substantially revises FDA&rsquo;s December 2019 draft guidance of the same name, which itself was an update to FDA&rsquo;s 1998 guidance on the same topic.[[N: U.S. Food &amp; Drug Admin., <em>Demonstrating Substantial Evidence of Effectiveness for Human Drug and Biological Products: Draft Guidance for Industry</em>, at 1 (June 2026) (&ldquo;2026 Draft Substantial Evidence Guidance&rdquo;); U.S. Food &amp;&nbsp;Drug Admin., <em>Demonstrating Substantial Evidence of Effectiveness for Human Drug and Biological Products: Draft Guidance for Industry</em>, at 1 (Dec. 2019); U.S. Food &amp; Drug Admin., <em>Providing Clinical Evidence of Effectiveness for Human Drug and Biological Products: Guidance for Industry</em>, at 1 (May 1998). When finalized, the 2026 Draft Substantial Evidence Guidance will replace the 1998 Guidance.]] The 2026 Draft Substantial Evidence Guidance reframes how sponsors should plan to meet the &ldquo;substantial evidence&rdquo; standard for demonstrating effectiveness.[[N: 21 U.S.C. &sect; 355(d).]] In particular, it shifts focus from the previous default posture of two &ldquo;adequate and well-controlled investigations&rdquo;[[N: <em>Id</em>. (emphasis added).]] onto what had been considered the exception to that general requirement: a single adequate and well-controlled clinical investigation with confirmatory evidence.[[N: <em>Id</em>.]]</p> <p>FDA&rsquo;s rewrite is intended to &ldquo;clarify circumstances in which drug developers may be able to rely on data from one adequate and well-controlled pivotal clinical investigation with confirmatory evidence, to demonstrate substantial evidence of effectiveness for drug approval.&rdquo;[[N: U.S. Food &amp; Drug Admin., Fact Sheet, <a rel="noopener noreferrer" href="https://www.fda.gov/media/193225/download?attachment" target="_blank">FDA Actions to Accelerate and Modernize Early and Late-Stage Clinical Development</a>]] In so doing, the 2026 Draft Substantial Evidence Guidance appears to:&nbsp;</p> <ul> <li>Broaden the circumstances in which a single pivotal trial strategy with confirmatory evidence would be expected to meet the standard for substantial evidence of effectiveness in support of a marketing application &mdash; and thus potentially shift the burden onto FDA to justify requiring a second trial;</li> <li>Clarify that confirmatory evidence can come from several sources, including related adequate and well-controlled trial data, data supporting a related indication for the same drug, evidence from other approved drugs in the same pharmacologic class, mechanistic and biological information, early-phase clinical data, natural history or registry data, and other external information;</li> <li>Explain that confirmatory evidence must be strong enough &mdash; and from a reliable enough source &mdash; to yield the confirmatory evidence that a second adequate and well-controlled trial otherwise would have done;&nbsp;</li> <li>Focus FDA&rsquo;s confirmatory evidence analysis on the strength of the evidence as determined by trial design, conduct, prespecified analysis, endpoint selection, results, data missingness, consistency across endpoints and subgroups, and the overall development program; and</li> <li>Describe FDA&rsquo;s revised policy regarding flexibility in statistical analysis, including recognition that a p-value greater than a one-sided 0.025 threshold may be acceptable in some circumstances, while also warning that a one-sided 0.025 threshold may be insufficient where the pretrial probability of effectiveness is low.</li> </ul> <p>The 2026 Draft Substantial Evidence Guidance also signals a preference for clinical endpoints when possible, stating that &ldquo;[u]se of a clinical endpoint is preferred when feasible&rdquo;; use of a surrogate endpoint is relegated to &ldquo;[a]n alternative approach.&rdquo;[[N: 2026 Draft Substantial Evidence Guidance at 5.]] If maintained in final guidance, this could signal a more general shift in FDA&rsquo;s thinking on accelerated approval.</p> <h2>Background: The Substantial Evidence of Effectiveness Standard</h2> <p>As detailed in <a href="/en/perspectives/advisories/2026/02/fda-advances-a-plausible-mechanism-framework-for-rare-disease-drug-development-and-shifts-to">Arnold &amp; Porter&rsquo;s prior Advisory</a>, section 505(d) of the Federal Food, Drug, and Cosmetic Act (FD&amp;C Act) requires &ldquo;substantial evidence&rdquo; of effectiveness for approval of a drug. The statutory definition refers to adequate and well-controlled investigations by qualified experts. It provides that, if FDA determines based on relevant science that &ldquo;data from one adequate and well-controlled clinical investigation and confirmatory evidence&rdquo; are sufficient to establish effectiveness, FDA may consider that data and evidence to constitute substantial evidence.[[N: 21 U.S.C. &sect; 355(d).]]</p> <p>FDA&rsquo;s implementing regulations explain that investigations should be adequate and well-controlled to be able to distinguish the effect of a drug from other influences, such as spontaneous change in the disease, placebo effect, or biased observation.[[N: 21 C.F.R. &sect; 314.126.]] The regulations also identify study design features that ordinarily will be considered adequate and well-controlled: a clear protocol, appropriate controls, methods of patient selection and assignment that minimize bias, methods to minimize subject and observer bias, well-defined and reliable response measures, and adequate analytical methods.[[N: <em>Id</em>. &sect; 314.126(a), (b).]]</p> <p>The 2026 Draft Substantial Evidence Guidance does not purport to alter the statutory or regulatory standard. But it is significant insofar as it describes how, when finalized, FDA intends to interpret and apply the statutory standard in a way that differs from historical practice (even if a large swath of drugs already have been approved in reliance on a single trial with confirmatory evidence). This is particularly telling when read against FDA&rsquo;s broader, recent theme of emphasizing the quality, relevance, and biological coherence of the evidence package rather than insisting on multiple pivotal trials in every application.[[N: In their 2025 New England Journal of Medicine article on FDA&rsquo;s &ldquo;plausible mechanism pathway,&rdquo; then-FDA Commissioner Makary and then-CBER Director Prasad described a framework for certain individualized therapies where randomized trials may not be feasible and where effectiveness may be supported by a well-characterized disease biology, a therapy that targets the underlying abnormality, evidence that the target was successfully drugged or edited, natural history information, and improvement in clinical outcomes or disease course. Vinay Prasad &amp; Martin A. Makary, FDA&rsquo;s New Plausible Mechanism Pathway, 393 New Eng. J. Med. 2365 (2025).]]</p> <h2>A Single Trial with Confirmatory Evidence as the New Default</h2> <p>The 2026 Draft Substantial Evidence Guidance puts the FD&amp;C Act&rsquo;s single-trial-with-confirmatory-evidence language at the center of development planning. According to the 2026 Draft Substantial Evidence Guidance, FDA will consider the design, conduct, analysis, and persuasiveness of the single trial; the source and strength of the confirmatory evidence; disease-specific considerations such as seriousness, unmet need, and prevalence; and whether more than one adequate and well-controlled trial would be ethical and practicable.&nbsp; Thus, sponsors should be prepared to explain, before initiating the single pivotal trial, why the proposed clinical investigation is adequate and well-controlled and why the proposed confirmatory evidence is sufficient.&nbsp; Additional trials may be required when a single trial is not sufficiently representative, or where more evidence is needed to support the safety or benefit-risk calculus &mdash; though FDA appears poised to consider those situations the exception rather than the rule, and the draft guidance notes that in some situations a convincingly positive, well-conducted trial showing a substantial decrease in mortality may make a second trial impractical or unethical.[[N: 2026 Draft Substantial Evidence Guidance at 9, 11-12.]]</p> <p>FDA recommends sponsors discuss their proposed approach to demonstrating substantial evidence early in development, including at a pre-IND meeting and no later than at the end of phase 2. Sponsors should be prepared to present the proposed trial design, the confirmatory evidence package, the legal basis for any reliance on external or third-party evidence, and the statistical rationale.[[N: <em>Id</em>. at 2, 9.]]</p> <h2>Strength of the Single Trial</h2> <p>The 2026 Draft Substantial Evidence Guidance sets forth an expectation that to support approval, the single pivotal trial will be particularly persuasive, such that it can carry most of the evidentiary weight of &ldquo;substantial evidence.&rdquo;[[N: <em>Id</em>. at 8-9, 11-12.&nbsp; The more limited or indirect that confirmatory evidence is, the more persuasive the pivotal trial will need to be.]] This means that the trial must be generalizable to U.S. clinical practice, reflective of a broad and representative population across multiple sites, include a control arm and supportive therapies that reflect the current standard of care, and utilize a clinically meaningful primary endpoint. FDA identifies multiple factors that affect whether the evidence can support a fair and responsible expert conclusion about effectiveness. These factors include:</p> <ul> <li><em>Trial design</em>. FDA focuses on the control group, randomization, blinding, endpoint selection, eligibility criteria, site selection, representativeness, the standard of care, and whether the design is appropriate for the clinical question. The single trial must also be sufficiently powered to convincingly demonstrate an effect.&nbsp;&nbsp;</li> <li><em>Trial conduct</em>. FDA emphasizes data quality, adherence to treatment and protocol, completeness of follow-up, minimization of bias, and the effect of missing data.</li> <li><em>Analysis plan</em>. FDA expects prespecification, control of type I error where applicable, appropriate estimands, sensitivity analyses, and well-justified frequentist or Bayesian methods.</li> <li><em>Trial results</em>. FDA will consider statistical persuasiveness, clinical meaningfulness, magnitude of effect, uncertainty, consistency across endpoints and subgroups, and robustness to analysis assumptions.</li> <li><em>Overall development program</em>. FDA will evaluate the pivotal trial in light of early-phase data, external information, dose and mechanism information, any inconsistent data, and all relevant adequate and well-controlled trials.</li> </ul> <p>To ensure sufficient strength, sponsors should endeavor to also build into the single trial (and the related statistical analysis plan) prespecified supportive secondary endpoints, as well as supportive results across important subsets, high-quality conduct, comprehensive follow-up, minimal data missingness, and robustness of assumptions. Sponsors also should identify any potentially inconsistent evidence early; an adequate and well-controlled trial showing no effect, or even harm, with confidence intervals that rule out meaningful effects, could call into question positive results from other trials unless there is a clear and compelling explanation for the difference.[[N: <em>Id</em>.]]</p> <h2>Options for Confirmatory Evidence&nbsp;</h2> <p>The 2026 Draft Substantial Evidence Guidance also lays out several options that FDA may find persuasive as confirmatory evidence to support data from a single trial:&nbsp;</p> <ol> <li><em>Related adequate and well-controlled trial data</em>. FDA generally expects strong confirmatory evidence to come from related trials in related diseases or conditions or for related products. For an already-approved drug, FDA explains that a single pivotal trial may be supported by the adequate and well-controlled trials that supported approval for a different but closely related indication. FDA identifies the degree of similarity in disease pathophysiology, mechanism of action, and efficacy endpoints as critical considerations.[[N:<em> Id</em>. at 9-10.]]</li> <li><em>Adequate and well-controlled trials demonstrating the effectiveness of other approved drugs in the same pharmacologic class</em>. Here, the strength and relevance of the confirmatory evidence will depend on factors such as the similarity of the mechanism of action, whether similar endpoints were measured, the consistency of effects across the class, whether the new drug has similar effects, and the number of approved drugs in the class.[[N: <em>Id</em>. at 10 n.34.]] This could be particularly beneficial for sponsors in competitive drug classes where FDA is more likely to accept existing data as persuasive confirmatory evidence.</li> <li><em>Natural history and other external information</em>. Natural history or registry data may serve as confirmatory evidence in appropriate circumstances, particularly where the clinical course without treatment is well characterized, and the treated trial result is difficult to attribute to bias or random variation. Early-phase information supporting the drug&rsquo;s mechanism and dose, external information about disease pathophysiology and natural history, effects of the drug in related diseases, and effects of drugs with similar mechanisms of action can all help to support FDA&rsquo;s expectation that the drug will be effective.[[N: <em>Id</em>. at 8-9, 16.]]</li> </ol> <p>FDA appears to recognize that its recommendation of reliance on other approved NDAs and BLAs raises important legal questions, and the Agency notes that reliance on data concerning a different drug may raise legal and regulatory concerns.[[N: <em>Id</em>. at 10 n.34.]] If an NDA applicant does not own or have a right of reference to the other drug&rsquo;s data, reliance on FDA&rsquo;s prior finding of safety and effectiveness will convert the application into a 505(b)(2) application and trigger associated patent-certification and exclusivity considerations.[[N: 21 U.S.C.&nbsp; &sect; 355(b)(2).]] And importantly, for biological products (for which there is no pathway comparable to a 505(b)(2)), FDA reiterates its long-standing policy that a section 351(a) applicant must include all of the data and information necessary for approval in the Biologics License Application (BLA). In the alternative, FDA explains that to rely on a prior determination of safety, purity, and potency for another biological product to support approval, the applicant would need to submit a biosimilar BLA and otherwise meet the requirements to demonstrate biosimilarity.[[N: 42 U.S.C. &sect; 262(k).]] (As an aside, we cannot help but note the tension between FDA&rsquo;s position here &mdash; that sponsors may not rely on prior knowledge to support a BLA without a right of reference &mdash; and FDA&rsquo;s draft guidance, <em>Leveraging Prior Knowledge in the Development of Human Gene Therapy Products Incorporating Genome Editing</em>, which appears to encourage sponsors to use relevant prior knowledge, including knowledge from previous clinically studied products, to support development of genome-editing gene therapy biological products.)[[N: U.S. Food &amp; Drug Admin., <em>Leveraging Prior Knowledge in the Development of Human Gene Therapy Products Incorporating Genome Editing Draft Guidance</em>, at 2-3, 18-19 (June 2026).]] Stakeholders may wish to ask FDA to distinguish clearly between reliance on published or public scientific knowledge to support a scientific inference and legal reliance on another sponsor&rsquo;s proprietary data or FDA&rsquo;s prior approval finding.</p> <h2>The Revised Draft Guidance Offers Statistical Flexibility</h2> <p>The 2026 Draft Substantial Evidence Guidance also incorporates a more flexible approach to statistical analysis, explaining that the overall persuasiveness of a trial&rsquo;s results may be influenced by the magnitude of the p-value, or by alternative measures such as the posterior probability of effectiveness in a Bayesian analysis, as well as by the magnitude and clinical meaningfulness of the effect on the primary endpoint. FDA also notes that a statistically significant result in a large trial may not be clinically meaningful. At the same time, even small effects may be clinically meaningful when the effect is on survival or irreversible morbidity. To that end, the 2026 Draft Substantial Evidence Guidance explains that the appropriate significance level will depend on the prior, or pretrial, probability that the drug is effective. Where the prior probability is low, a single trial using the common one-sided 0.025 significance level may not adequately limit the probability of false-positive effectiveness conclusions. Conversely, in other circumstances, including where prior knowledge or strong confirmatory evidence increases confidence in effectiveness, FDA indicates that a p-value greater than one-sided 0.025 may be acceptable as part of the totality of evidence.[[N: 2026 Draft Substantial Evidence Guidance at 8, 11, 15.]]</p> <p>Sponsors considering statistical flexibility should seek alignment with FDA early, build the rationale into the protocol and statistical analysis plan, and explain how the proposed approach satisfies the statutory function of substantial evidence. Commenters may wish to ask FDA to provide examples to illustrate when FDA would accept a less stringent or more stringent threshold and how Bayesian operating characteristics should be calibrated in single-trial-with-confirmatory-evidence programs.</p> <h2>Other Points of Interest</h2> <ol> <li><em>Animal Rule is beyond the scope of the Revised Guidance</em>. FDA expressly excludes Animal Rule approvals from the scope of the 2026 Draft Substantial Evidence Guidance.[[N: <em>Id</em>. at 9 n.33.]] The Animal Rule regulations permit reliance on animal studies to establish effectiveness for certain products when human efficacy studies are not ethical or feasible. Still, FDA states that those regulations and related considerations are beyond the scope of this draft guidance.</li> <li><em>Accelerated approval and surrogate endpoints</em>. As noted above, the 2026 Draft Substantial Evidence Guidance states that the use of a clinical endpoint is preferred when feasible and that the use of a surrogate endpoint requires appropriate scientific justification linking the drug's effects on the surrogate endpoint to its effects on a relevant clinical endpoint. It also recognizes that surrogate endpoints reasonably likely to predict clinical benefit can support accelerated approval when statutory criteria are met, while validated surrogate endpoints can support traditional approval.[[N: <em>Id</em>. at 5-6.]] Sponsors should consider whether to comment on how the single-trial-with-confirmatory-evidence framework applies to accelerated approval programs, particularly where the pivotal evidence rests on a surrogate or intermediate clinical endpoint.</li> <li><em>Relationship to plausible mechanism pathway</em>. The 2026 Draft Substantial Evidence Guidance&rsquo;s connection to FDA&rsquo;s <em>Considerations for the Use of the Plausible Mechanism Framework to Develop Individualized Therapies that Target Specific Genetic Conditions with Known Biological Cause Draft Guidance</em> (&ldquo;Plausible Mechanism Draft Guidance&rdquo;) is also notable.[[N: <em>Id</em>. at 10 n.34, 13 n.38; U.S. Food &amp; Drug Admin., <em>Considerations for the Use of the Plausible Mechanism Framework to Develop Individualized Therapies that Target Specific Genetic Conditions with Known Biological Cause: Draft Guidance for Industry</em>, at 1-2, 5-6 (Feb. 2026) (&ldquo;Plausible Mechanism Draft Guidance&rdquo;).]] In that separate draft guidance, FDA proposed recommendations for individualized therapies targeting specific genetic conditions with known biological causes, including genome editing and RNA-based therapies for very small patient populations.[[N: Plausible Mechanism Draft Guidance at 1-2.]] The revised substantial evidence guidance places that framework within the broader concept of regulatory flexibility, though sponsors may wish to consider commenting on how mechanistic evidence, biological plausibility, and early clinical evidence can be used outside the narrow individualized-therapy context.</li> </ol> <h2>Conclusion</h2> <p>The 2026 Draft Substantial Evidence Guidance gives direction on how FDA intends to operationalize the default use of a single trial with confirmatory evidence to meet &ldquo;substantial evidence.&rdquo;&nbsp; It also leaves a number of open questions and room for commenters to influence the final guidance. In particular, stakeholders may wish to comment on the following topics, among others.&nbsp;</p> <ul> <li>When a single adequate and well-controlled trial will be considered &ldquo;highly persuasive,&rdquo; including whether FDA will provide therapeutic-area-specific examples.</li> <li>The boundary between permissible scientific reliance on public or platform knowledge and legal reliance on another sponsor&rsquo;s data or FDA&rsquo;s prior findings, particularly for 351(a) BLAs.</li> <li>Whether FDA&rsquo;s preference for clinical endpoints foreshadows disfavored use of accelerated approval, which has been an important approach to achieving patient access to new therapies for several decades.</li> <li>Examples of statistical flexibility, including when a p-value greater than one-sided 0.025 may be acceptable and when a more stringent threshold may be expected.</li> <li>Expectations for multiregional or largely ex-U.S. trials, including what FDA views as a sufficient number of U.S. patients and how sponsors can bridge representativeness gaps.</li> </ul> <p>If you have any questions, would like more information, or would like to discuss submitting a comment to FDA&rsquo;s 2026 Draft Substantial Evidence Guidance (by September 22, 2026), FDA&rsquo;s Request for Information (RFI) on the Expedited Investigational New Drug Pilot program (by July 22, 2026), or HHS Office of Inspector General&rsquo;s RFI (by August 24, 2026), please reach out to one of the authors of this Advisory or your existing Arnold &amp; Porter contacts.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{59A720FC-F3A3-49E4-8195-D1839D1105D1}https://www.arnoldporter.com/en/perspectives/publications/2026/06/the-chemical-compoundCamille Heyboerhttps://www.arnoldporter.com/en/people/h/heyboer-camillecamille.heyboer@arnoldporter.comKatrina R. Umsteadhttps://www.arnoldporter.com/en/people/u/umstead-katrinakatrina.umstead@arnoldporter.comLawrence E. Culleenhttps://www.arnoldporter.com/en/people/c/culleen-lawrence-elawrence.culleen@arnoldporter.comBrandon W. Neuschaferhttps://www.arnoldporter.com/en/people/n/neuschafer-brandon-wbrandon.neuschafer@arnoldporter.comTom Foxhttps://www.arnoldporter.com/en/people/f/fox-tomTom.Fox@arnoldporter.comThis edition of our quarterly newsletter on chemical regulatory developments provides updates on litigation, regulatory, legislative, and policy developments of importance to our clients. The newsletter focuses on actions affecting chemical substances that are the subject of ongoing regulatory activity or scrutiny by federal, state, and international authorities, as well as developments in related litigation.Wed, 24 Jun 2026 00:00:00 -0500<p>This edition of our quarterly newsletter on chemical regulatory developments provides updates on litigation, regulatory, legislative, and policy developments of importance to our clients. The newsletter focuses on actions affecting chemical substances that are the subject of ongoing regulatory activity or scrutiny by federal, state, and international authorities, as well as developments in related litigation. These include, among others, per- and polyfluoroalkyl substances (PFAS) and other chemicals of concern to the U.S. Environmental Protection Agency (EPA or the Agency) under the Toxic Substances Control Act (TSCA), EPA pesticide actions under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), as well as emerging regulatory frameworks in the United States and abroad. Check here each quarter for a curated presentation of the most important developments affecting chemical manufacturers, importers, processors, and users. </p> <h2>Table of Contents</h2> <ul> <li><span style="font-size: 24px;"><a href="#TSCA Updates">TSCA Updates</a></span></li> <li><span style="font-size: 24px;"><a href="#FIFRA Updates">FIFRA Updates</a></span></li> <li><span style="font-size: 24px;"><a href="#Federal Litigation Updates">Federal Litigation Updates</a></span></li> <li><span style="font-size: 24px;"><a href="#State Regulatory Updates">State Regulatory Updates</a></span></li> <li><span style="font-size: 24px;"><a href="#European Union">European Union</a></span></li> </ul> <p> </p> <h2><a name="TSCA Updates"></a>TSCA Updates</h2> <h3>EPA Releases Initial Lists of Expiring TSCA CBI Claims</h3> <p>EPA recently released its <a rel="noopener noreferrer" href="https://www.epa.gov/tsca-cbi/cbi-claim-expiration" target="_blank">initial lists</a> of TSCA confidential business information (CBI) claims scheduled to expire beginning June 22, marking the beginning of a new phase in the Agency&rsquo;s implementation of TSCA&rsquo;s 10-year limit on most confidentiality claims. EPA has explained that confidentiality claims for most information submitted under TSCA expire 10 years after the date on which the claim was asserted, while claims for specific chemical identity generally expire 10 years from the submission date of the first approved post-June 22, 2016, claim for that identity. Importantly, this means that some submitters may find that the chemical identity CBI claim applicable to their submission expires less than 10 years after their own filing. </p> <p>EPA&rsquo;s initial list covered claims expiring between June 22, 2026, and July 31, 2026, and the Agency subsequently released a list of claims expiring in August 2026. The Agency is expected to update the lists monthly as additional claims approach expiration. Submitters that wish to extend a claim must request an extension through EPA&rsquo;s Central Data Exchange (CDX) and provide the required substantiation at least 30 days before the claim&rsquo;s expiration date. EPA also hosted a May 6 <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2026-05/tsca-cbi-claims-expiration-webinar.pdf" target="_blank">webinar</a> addressing the lifecycle of TSCA CBI claims, how to determine whether a claim is expiring, and how to request an extension, including a demonstration of the CDX application. </p> <p>Companies with prior TSCA submissions should review EPA&rsquo;s lists and evaluate whether any expiring claims cover information that remains confidential and commercially sensitive. Where continued protection is warranted, companies should ensure that their CDX access is current and that substantiation materials are prepared in advance of the applicable deadline. Notably, EPA stressed during the May 6 webinar the importance of robust substantiation for CBI claims, and emphasized that substantiation deemed acceptable at the time of the original claims may not be sufficient to support an extension request. Absent a timely extension request, EPA has stated that it is not required to continue protecting the information from disclosure.&nbsp;&nbsp;</p> <h3>EPA Enforcement Action Highlights TSCA Import Compliance Risk</h3> <p>On June 1, EPA <a rel="noopener noreferrer" href="https://www.epa.gov/newsreleases/epa-files-case-against-chemical-supplier-failing-disclose-imports-hundreds-millions" target="_blank">announced</a> an administrative complaint against Wego Chemical Group and affiliated companies for violations of TSCA arising from the importation and domestic distribution of chemical substances. The complaint alleges eight categories of violations reflecting what EPA describes as a sustained pattern of failing to report, notify, and certify, including failure to submit timely Chemical Data Reporting (CDR) data and required use information across two reporting cycles, failure to submit a premanufacture notice (PMN) and significant new use notices, and the filing of inaccurate regulatory submissions. EPA also alleged that Wego submitted a false certification that it had not imported a chemical subject to a TSCA risk evaluation during the preceding five years.</p> <p>The complaint follows TSCA Section 20 citizen suits premised on alleged CDR reporting violations, including a 2025 settlement reached between Wego and an environmental organization, illustrating the potential for citizen enforcement activity to precede or inform subsequent EPA action. The action also reflects EPA&rsquo;s broader emphasis on import enforcement, including the Agency&rsquo;s <a rel="noopener noreferrer" href="https://www.epa.gov/newsreleases/epa-accelerates-crackdown-toxic-and-poisonous-imports-concert-cbp-keeping-americans" target="_blank">coordinated effort </a>with U.S. Customs and Border Protection to increase scrutiny of chemicals, pesticides, and other products entering the United States. For companies that import chemical substances or products containing regulated chemicals, the complaint is a reminder that TSCA obligations may attach at several stages of the import process and that deficiencies in reporting, notification, or certification can create exposure to both citizen suits and EPA enforcement.</p> <h3>EPA Issues Final Risk Evaluation for 1,2-Dichloroethane, Starting TSCA Risk Management Clock</h3> <p>On May 5, EPA <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/05/05/2026-08682/12-dichloroethane-final-risk-evaluation-under-the-toxic-substances-control-act-tsca-notice-of" target="_blank">announced</a> its final TSCA risk evaluation for 1,2-dichloroethane, also known as ethylene dichloride or EDC. 1,2-dichloroethane is primarily used in the synthesis of vinyl chloride and also has industrial uses as a solvent and in the manufacture of other chemicals.</p> <p>EPA determined that 1,2-dichloroethane presents an unreasonable risk of injury to human health under 15 conditions of use, with the identified risks driven by workplace exposures to workers and occupational non-users. EPA did not identify unreasonable risk to consumers, the general population, or the environment. Consistent with TSCA&rsquo;s risk evaluation framework, EPA made its unreasonable risk determination without consideration of costs or other non-risk factors.</p> <p>EPA&rsquo;s next step is to develop a TSCA Section 6(a) risk management rule to address the unreasonable risk identified in the final risk evaluation. Under TSCA Section 6(c), EPA generally must publish a proposed risk management rule within one year of issuing a final risk evaluation that finds unreasonable risk, and a final rule within two years. Accordingly, EPA&rsquo;s deadline for the proposed rule for 1,2-dichloroethane is May 5, 2027, absent an applicable extension. The risk management process will provide the key forum for affected manufacturers, processors, and users to engage with EPA on potential restrictions, compliance timelines, workplace controls, and other measures to address the identified occupational risks.</p> <h3>EPA Releases 2024 Chemical Data Reporting Information</h3> <p>On April 16, EPA <a rel="noopener noreferrer" href="https://www.epa.gov/chemicals-under-tsca/epa-empowers-americans-2024-chemical-data-reporting-information" target="_blank">released</a> information submitted during the 2024 Chemical Data Reporting (CDR) cycle, providing public access to data on chemicals manufactured in or imported into the United States between 2020 and 2023. CDR is EPA&rsquo;s primary TSCA Section 8(a) reporting program for collecting basic exposure-related information, including chemical identity, production volumes, manufacturing and import activity, processing and use information, and certain industrial, commercial, and consumer use data.</p> <p>The 2024 CDR data reflect submissions from manufacturers, including importers, of TSCA Inventory chemicals that met applicable reporting thresholds &mdash; generally 25,000 pounds or more at a single site, or 2,500 pounds or more for certain chemicals subject to specified TSCA actions. EPA stated that the data are available in downloadable files and will be added to ChemView. The Agency also emphasized that it uses CDR data to support chemical prioritization, risk evaluation, and other TSCA activities.</p> <p>The release provides companies with an opportunity to review publicly available information about their own submissions, as well as submissions relating to their suppliers, customers, competitors, and substances of regulatory interest. Companies may also wish to consider whether the public data align with their understanding of chemical uses and supply chains, particularly for chemicals that could be candidates for future prioritization or risk evaluation. The next CDR reporting cycle is scheduled for 2028. The submission period is expected to run from June 1, 2028, through September 30, 2028 and will require reporting of data from 2024-2027.</p> <h3>EPA Extends Start of TSCA PFAS Reporting Period&nbsp;</h3> <p>On April 13, EPA <a rel="noopener noreferrer" href="https://www.govinfo.gov/content/pkg/FR-2026-04-13/pdf/2026-07062.pdf" target="_blank">released</a> a final rule extending the start of the reporting period for the TSCA Section 8(a)(7) PFAS reporting rule. The reporting period had been scheduled to begin on April 13, 2026, but will now begin on January 31, 2027, or 60 days after the effective date of EPA&rsquo;s forthcoming final rule addressing the substantive PFAS reporting requirements, whichever is earlier.</p> <p>EPA effectuated this extension by finalizing only the timing amendment from its November 2025 proposed rule, which also proposed broader changes to the PFAS reporting regulation. Those proposed changes included potential exemptions or limitations for certain imported articles, de minimis levels, impurities, byproducts, research and development substances, and non-isolated intermediates. EPA stated that it expects to finalize the substantive revisions &ldquo;well before&rdquo; the January 31, 2027, backstop date for the opening of the submission period and may further address the duration of the submission period as part of that forthcoming final rule.</p> <p>For now, EPA has retained the current six-month submission period, with an additional six months for small manufacturers whose reporting obligations arise exclusively from importing PFAS-containing articles. The extension gives EPA additional time to consider comments on the November 2025 proposal and gives potentially regulated entities more time to evaluate their reporting obligations under the existing rule, and how their reporting obligations may change under the November 2025 proposal. Companies that manufactured or imported PFAS, including PFAS-containing articles, during the 2011-2022 reporting period should continue monitoring EPA&rsquo;s forthcoming substantive rulemaking and use the additional time to assess supply chain information, historical import records, and potential applicability of any final exemptions.</p> <h3>EPA Releases Draft Risk Evaluations for HHCB and Phthalic Anhydride</h3> <p>On April 10, EPA published draft risk evaluations for <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2026-04/01-hhcb-draft-risk-evaluation-public-release-march-2026.pdf" target="_blank">1,3,4,6,7,8-Hexahydro-4,6,6,7,8,8-Hexamethylcyclopenta [g]-2-Benzopyran (HHCB)</a> and <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2026-04/01-draft-risk-evaluation-for-phthalic-anhydride-public-release-march-2026.pdf" target="_blank">phthalic anhydride</a>. EPA also published a Federal Register notice opening a 60-day public comment period on the two draft risk evaluations, which closed on June 15, 2026. A separate Federal Register notice sought comment by May 29, 2026, on materials to be considered by EPA&rsquo;s Science Advisory Committee on Chemicals (SACC), which met June 8-12, 2026, to peer review the draft evaluations and related materials.</p> <p>EPA&rsquo;s draft HHCB risk evaluation preliminarily concludes that HHCB does not present an unreasonable risk under the conditions of use evaluated. HHCB is used as a fragrance ingredient or odor agent in chemical product and plastics manufacturing and in products such as detergents, cleaners, air fresheners, and plastic and rubber articles. If finalized as drafted, the HHCB evaluation would represent a notable instance in which EPA concludes that a high-priority substance does not present unreasonable risk under TSCA Section 6 and for which EPA would therefore not be required to pursue risk management.</p> <p>By contrast, EPA&rsquo;s draft phthalic anhydride risk evaluation preliminarily concludes that the chemical presents an unreasonable risk to workers and consumers from dermal and inhalation exposures. The worker-related conditions of use identified as contributing to unreasonable risk include industrial and commercial uses in transportation equipment manufacturing, machinery and mechanical applications, and electrical and electronic articles. EPA also identified consumer uses in adhesives and sealants and in paints and coatings as contributing to unreasonable risk. If EPA finalizes this unreasonable risk determination, it will then be required to propose risk management measures to address the identified unreasonable risk.&nbsp;</p> <h3>EPA Releases Draft Hazard Assessments for o-DCB and p-DCB</h3> <p>On April 10, EPA published draft hazard assessments for <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2026-04/2-o-dichlorobenzene-draft-human-and-environmental-hazard-assessment-public-release-april-2026.pdf" target="_blank">o-dichlorobenzene (o-DCB)</a> and <a rel="noopener noreferrer" href="https://www.epa.gov/system/files/documents/2026-04/4-p-dichlorobenzene-draft-human-health-and-env-haz-assess-public-release-apr-2026.pdf" target="_blank">p-dichlorobenzene (p-DCB)</a>, which will support EPA&rsquo;s forthcoming TSCA draft risk evaluations for those chemicals. EPA has not yet issued unreasonable risk determinations for o-DCB or p-DCB. Instead, the Agency is first seeking public comment and SACC peer review on the draft hazard assessments and related technical support documents before releasing the draft risk evaluations.</p> <p>o-DCB is used in the manufacture of chemicals, plastic materials, and resins, and in products such as inks, colorants, and lubricants, including degreasers. p-DCB is used as a reactant in plastic material and resin manufacturing, in pesticide and fertilizer manufacturing processes, and in products such as plastic foam sealants and insulation and automotive care products. EPA&rsquo;s draft hazard assessments are noteworthy because the Agency used New Approach Methods (NAMs), including transcriptomics, in developing the assessments and has described the scientific approaches as &ldquo;unique and novel.&rdquo;</p> <p>The SACC peer review meeting took place on June 8-12, 2026. The Agency&rsquo;s use of NAMs in these assessments was an important topic of this meeting and will likely be an important focus of the peer review. The SACC report on these draft hazard assessments may therefore provide insight into how EPA intends to incorporate transcriptomic and other nontraditional data streams into future TSCA risk evaluations.</p> <h3>EPA Publishes Draft Risk Evaluation for TBBPA</h3> <p>On June 16, EPA published a <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2026/06/16/2026-12012/44-1-methylethylidenebis26-dibromophenol-tbbpa-risk-evaluation-under-the-toxic-substances-control" target="_blank">notice </a>in the Federal Register announcing the availability of the draft risk evaluation for 4,4&rsquo;-(1-Methylethylidene)bis[2,6-dibromophenol] (TBBPA). TBBPA is primarily used as a reactant for flame retardants or as an additive flame retardant. It is found in electrical and electronic products, plastic and rubber products, and textiles in cars and airplanes, among other uses. In the draft risk evaluation, EPA identified unreasonable risk to workers driven by three conditions of use: manufacture, import, and repackaging. EPA also identified unreasonable risk to the environment driven by the incorporation of TBBPA into a formulation for use as a flame retardant in the manufacturing of plastics, resin, and paints and coatings. Notably EPA identified risk threshold exceedances for a number of other conditions of use but has preliminarily determined that these conditions of use do not contribute to the unreasonable risk because, for example, the Agency does not expect that the conditions under which the risk threshold exceedances exist are expected to occur in the real world. EPA has opened a public comment period through August 17, 2026, on the draft TBBPA risk evaluation.&nbsp;</p> <h3>EPA Again Extends TSCA Section 8(d) Reporting Deadline to May 2027</h3> <p>On May 22, EPA <a rel="noopener noreferrer" href="https://www.govinfo.gov/content/pkg/FR-2026-05-22/pdf/2026-10263.pdf" target="_blank">finalized</a> a one-year extension of the reporting deadline for its TSCA Section 8(d) Health and Safety Data Reporting Rule. The rule, originally issued in December 2024, requires manufacturers, including importers, of 16 listed chemical substances to submit copies and lists of certain unpublished health and safety studies to EPA. The reporting deadline had previously been May 22, 2026, and has now been extended to May 21, 2027.</p> <p>EPA explained that it is considering potential modifications to the scope of the Section 8(d) rule and the prior deadline would not provide sufficient time for EPA to complete its reconsideration. EPA previously proposed the extension on March 30, 2026, and finalized it without changing the substance of the underlying reporting obligations. The final rule became effective upon its publication on May 22, 2026.</p> <p>The extension provides additional time for potentially covered manufacturers and importers to evaluate whether they may have reporting obligations and to identify responsive unpublished health and safety studies. At the same time, because EPA may further modify the rule, companies should continue to monitor the reconsideration process.&nbsp;</p> <h2><a name="FIFRA Updates"></a>FIFRA Updates</h2> <h3>EPA Publishes Draft Fungicide Endangered Species Strategy<span style="font-size: 13px;"></span></h3> <p>On April 30, EPA published for public comment its &ldquo;<a rel="noopener noreferrer" href="https://www.regulations.gov/document/EPA-HQ-OPP-2026-2973-0002" target="_blank">Draft Fungicide Strategy to Reduce Exposure of Federally Listed Endangered and Threatened Species and Designated Critical Habitats from the Use of Conventional Agricultural Fungicides</a>&rdquo; (the &ldquo;Fungicide Strategy&rdquo;). This document is intended to outline EPA&rsquo;s approach to &ldquo;assess[ing] possible population-level impacts to listed species and identify[ing] mitigation to reduce the potential impacts from the use of agricultural fungicides,&rdquo; in order to accelerate EPA&rsquo;s ability to meet its obligations under the Endangered Species Act for the registration of agricultural fungicides.&nbsp; Under the draft Fungicide Strategy, EPA will first determine the potential for population-level impacts to endangered and threatened species from both on-field and off-field exposures, assess the appropriate level of mitigation based on the potential for population-level impacts, and identify the geographical area in which such mitigations are expected to be necessary. This strategy follows similar EPA strategies for <a rel="noopener noreferrer" href="https://www.epa.gov/endangered-species/strategy-protect-endangered-species-insecticides" target="_blank">insecticides</a>, <a rel="noopener noreferrer" href="https://www.epa.gov/endangered-species/strategy-protect-endangered-species-herbicides" target="_blank">herbicides</a>, and <a rel="noopener noreferrer" href="https://www.epa.gov/endangered-species/strategy-protect-endangered-species-rodenticides" target="_blank">rodenticides</a>. EPA is accepting public comment on the draft Fungicide Strategy until June 29, 2026, and intends to finalize the Fungicide Strategy by the end of November 2026.</p> <h2><a name="Federal Litigation Updates"></a>Federal Litigation Updates</h2> <h3><span> </span>Ninth Circuit Remands EPA&rsquo;s DecaBDE Rule Without Vacatur<span style="font-size: 13px;"></span></h3> <p>On May 13, the Ninth Circuit remanded to EPA the latest version of the Agency&rsquo;s first TSCA Section 6 rule issued following the 2016 amendments to the Act.&nbsp; Specifically, the court granted consolidated petitions filed by Alaska Community Action on Toxics, the Yurok Tribe, Consumer Federation of America, and Center for Environmental Transformation challenging EPA&rsquo;s 2024 TSCA section 6(h) rule for decabromodiphenyl ether (decaBDE), a persistent, bioaccumulative, and toxic (PBT) chemical used as an additive flame retardant in products such as electronics, appliances, and vehicle and aircraft components.</p> <p>The court held that EPA had not supported with substantial evidence its decisions not to further regulate four pathways for potential decaBDE exposures: recycling of articles, disposal, wastewater, and sewage sludge. In the court&rsquo;s view, TSCA Section 6(h) requires EPA to reduce exposure to PBT chemicals &ldquo;to the extent practicable,&rdquo; and EPA could not decline to impose restrictions based on &ldquo;low levels&rdquo; of exposure to decaBDE, a general policy to encourage recycling, or the existence of other statutory regimes such as RCRA, without adequately addressing contrary record evidence and available regulatory alternatives. The court reasoned that, because Congress had already identified decaBDE as sufficiently hazardous to warrant expedited regulation under Section 6(h), exposure levels may inform EPA&rsquo;s choice of regulatory tools but cannot, standing alone, justify a decision not to regulate. The panel also rejected EPA&rsquo;s argument that it could defer additional regulation of these pathways, finding that Section 6(h) calls for expedited action rather than open-ended, tiered rulemaking.</p> <p>The court remanded the rule to EPA without vacatur, thus leaving the 2024 rule in effect while EPA considers how to respond to the recent ruling As a result, current requirements&mdash;including worker protection requirements and restrictions on releases to water during the manufacture, processing, and distribution in commerce of decaBDE and decaBDE-containing products&mdash;remain operative pending further action from EPA. The opinion underscores the Ninth Circuit&rsquo;s view that, for PBT chemicals regulated under TSCA Section 6(h), EPA must meaningfully evaluate practicable exposure-reduction measures across the chemical&rsquo;s lifecycle and support any decision not to regulate with substantial record evidence. Of note, the court&rsquo;s decision addresses only the decaBDE rule and does not directly affect EPA&rsquo;s other Section 6(h) rules issued for PBT chemicals, specifically: phenol, isopropylated phosphate (PIP (3:1)), 2,4,6-Tris(tert-butyl)phenol (2,4,6-TTBP), hexachlorobutadiene (HBCD), and pentachlorothiophenol (PCTP).</p> <h3>Ninth Circuit Vacates District Court Decision Requiring EPA To Act on TSCA Section 21 Petition for Regulation of Fluoride in Drinking Water&nbsp;</h3> <p>On May 21, the Ninth Circuit vacated and remanded the Northern District of California&rsquo;s decision directing EPA to regulate fluoridation of drinking water under TSCA Section 6(a). The case arose from EPA&rsquo;s denial of a 2016 TSCA Section 21 petition seeking a rule banning the addition of fluoride to drinking water. After two bench trials, the district court held that fluoridation of drinking water at 0.7 mg/L presents an unreasonable risk to human health and ordered EPA to address that risk under TSCA.</p> <p>In its decision, the Ninth Circuit did not address whether fluoridation at 0.7 mg/L (or any other level) presents an unreasonable risk. Instead, the court held that the district court &ldquo;commandeer[ed]&rdquo; the case by refusing to decide the matter on the first trial record despite both parties urging it to do so, holding the case in abeyance while awaiting additional scientific materials, and then relying on evidence the parties had agreed not to present. The panel concluded that this &ldquo;takeover&rdquo; of the evidentiary presentation by the district court violated the party-presentation principle and therefore remanded the case for the district court to rule based solely on the first trial record.</p> <p>The decision is narrow but important for TSCA Section 21 practice. The Ninth Circuit further held that, under the circumstances of the first bench trial, the district court did not err in considering evidence beyond the materials submitted with the original petition, but the panel explicitly declined to address whether Section 21 would permit such supplementation in other circumstances. The court also remanded EPA&rsquo;s standing arguments for consideration by the district court in the first instance. The remand leaves unresolved several issues with potentially broader implications for citizen petitions, including the permissible scope of judicial review and the role Section 21 litigation may play in prompting EPA action under TSCA.</p> <h3>Fifth Circuit Hears Argument in Challenge to EPA&rsquo;s Chrysotile Asbestos Rule</h3> <p>On June 1, the Fifth Circuit heard oral argument in consolidated challenges to EPA&rsquo;s 2024 TSCA Section 6(a) risk management rule for chrysotile asbestos. EPA&rsquo;s rule prohibits the manufacture, import, processing, distribution in commerce, and commercial use of chrysotile asbestos for several ongoing uses, including chlor-alkali diaphragms, sheet gaskets in chemical production, oilfield brake blocks, aftermarket automotive brakes and linings, other vehicle friction products, and other gaskets, with phased compliance deadlines and interim workplace controls for certain uses.&nbsp;</p> <p>Industry petitioners in this case have argued that EPA exceeded its authority by imposing prohibitions beyond what is &ldquo;necessary&rdquo; to address unreasonable risk, while public health petitioners have argued that the rule does not go far enough and should provide broader and faster protections. Prior to oral argument, the Fifth Circuit instructed the parties be prepared to discuss the standing of their respective organizations to challenge the risk management rule.&nbsp; Consistent with this instruction, oral argument focused heavily on standing and the court subsequently requested supplemental briefing from the parties on standing.&nbsp;&nbsp;</p> <p>The litigation presents an important early test of EPA&rsquo;s post-2016 TSCA Section 6 risk management authority (beyond the expedited PBT rules), and a decision could have implications beyond asbestos. Depending on whether and how the court addresses EPA&rsquo;s selection of risk management measures, compliance timelines, and the &ldquo;to the extent necessary&rdquo; standard under TSCA Section 6(a), the ruling may influence judicial review of EPA&rsquo;s other final and forthcoming risk management rules for chemicals for which the Agency has identified unreasonable risk.&nbsp;</p> <h3>U.S. Supreme Court Weighs FIFRA Preemption of State Pesticide Labeling Laws</h3> <p>On April 27, the U.S. Supreme Court heard oral argument in <em>Monsanto Company v. Durnell</em> (No. 24-1068). This case considers the scope of preemption under FIFRA, including explicit preemption under FIFRA section 24(b) (7 U.S.C. &sect; 136v(b)), which prohibits states from &ldquo;impos[ing] or continu[ing] in effect any requirements for labeling in addition to or different from those required&rdquo; under FIFRA. Specifically, the question at issue in this case is whether a pesticide manufacturer can be held liable under a state &ldquo;failure to warn&rdquo; law for not including a cancer warning on a pesticide label where EPA has concluded that the pesticide does not cause cancer. The Supreme Court&rsquo;s decision in this case will likely have significant impacts on the extent to which federal action under FIFRA preempts state law, and therefore on the availability of preemption as a defense in pesticide litigation under state tort laws.</p> <h2><a name="State Regulatory Updates"></a>State Regulatory Updates<span style="font-size: 13px;"></span></h2> <h3>New Mexico Finalizes PFAS Consumer Product Regulations</h3> <p>New Mexico&rsquo;s Environmental Improvement Board adopted <a rel="noopener noreferrer" href="https://prod-rf-lambda.rtssaas.com/PublicFiles/d89c47bd0d70402dba89b03a22bda6d1/edb0a023-ba9d-43b7-9027-64f003eadfd0/20.13.2new.pdf" target="_blank">final regulations</a> implementing the state&rsquo;s PFAS Protection Act, and such regulations were published in the New Mexico Register on May 5. The rule establishes reporting and labeling requirements, as well as currently unavoidable use and enforcement procedures for products containing intentionally added PFAS and is scheduled to take effect on July 1, 2026.</p> <p>The regulations implement New Mexico&rsquo;s phased restrictions on PFAS-containing products. Beginning January 1, 2027, the state will prohibit certain products containing intentionally added PFAS, including cookware, food packaging, dental floss, juvenile products, and firefighting foam. The restrictions expand on January 1, 2028, to additional categories, including carpets, cleaning products, cosmetics, fabrics, feminine hygiene products, textiles, ski wax, and upholstered furniture. By January 1, 2032, the law will prohibit all non-exempt products containing intentionally added PFAS unless the use has been determined to be a currently unavoidable use. </p> <p>The rule also creates near-term compliance obligations. Manufacturers of non-exempt products or product components containing intentionally added PFAS that are sold, offered for sale, or distributed for sale in New Mexico must submit required reporting information to the New Mexico Environment Department (NMED) on or before January 1, 2027. In addition, after January 1, 2027, manufacturers may not manufacture for sale or distribution a product containing intentionally added PFAS unless the product is labeled in accordance with New Mexico&rsquo;s requirements or the manufacturer documents compliance with corresponding labeling requirements adopted by another state, subject to applicable exemptions. Manufacturers should be aware that many categories of products exempt from the prohibition and reporting requirements under New Mexico&rsquo;s regulations are nonetheless subject to this labeling requirement.&nbsp; </p> <p>This rule is notable because it adds another broad state-level PFAS-in-products framework with near-term reporting, labeling, and product-ban deadlines, particularly relevant for companies selling products through national distribution channels. Manufacturers should assess whether products sold or distributed in New Mexico contain intentionally added PFAS and whether reporting, labeling, exemption, or currently unavoidable use strategies may be needed.</p> <p>Manufacturers should also monitor pending judicial review of the final rule, which has been appealed to the New Mexico Court of Appeals; absent a stay or other court action, companies should continue preparing for the rule&rsquo;s upcoming compliance deadlines.</p> <h3>Minnesota Extends PFAS Product Reporting Deadline</h3> <p>The Minnesota Pollution Control Agency (MPCA) has <a rel="noopener noreferrer" href="https://www.pca.state.mn.us/air-water-land-climate/reporting-pfas-in-products" target="_blank">extended</a> the initial reporting deadline under the state&rsquo;s PFAS in Products law from July 1, 2026, to September 15, 2026. The reporting requirement applies to manufacturers of products manufactured after July 1, 2023, and sold, offered for sale, or distributed in Minnesota that contain intentionally added PFAS, subject to limited applicable exclusions and exemptions.</p> <p>MPCA has also released additional information on requests for a single 90-day reporting extension and requests for reporting waivers where &ldquo;equivalent PFAS in product information is publicly available and verifiable.&rdquo; Extension and waiver requests must be postmarked by August 16, 2026. For manufacturers with approved extension requests, initial reports will be due December 14, 2026.</p> <p>The September 15, 2026, reporting deadline gives manufacturers additional time to gather supply chain information and prepare submissions through Minnesota&rsquo;s PFAS Reporting and Information System for Manufacturers (PRISM), but the reporting obligation remains significant. Companies selling products into Minnesota should continue assessing whether their products (or any components of their products) contain intentionally added PFAS, whether any exclusions or waiver arguments may apply, and whether an extension request is warranted before the August 16 deadline.</p> <h2><a name="European Union"></a>European Union</h2> <h3>European Chemicals Agency Risk Assessment Committee Adopts Opinion on Trifluoroacetic Acid</h3> <p>In a <a rel="noopener noreferrer" href="https://echa.europa.eu/documents/d/guest/rac77_final_minutes_en" target="_blank">summary</a> of its June 2026 meeting, the European Chemicals Agency&rsquo;s Risk Assessment Committee (RAC) announced that it has adopted an opinion that trifluoroacetic acid (TFA) should be classified as toxic to reproduction. The RAC also adopted an opinion that TFA should be classified as very persistent, very mobile, and toxic. The final RAC opinion is not yet publicly available. The European Commission will now consider the RAC opinion and determine whether to update the listing for TFA under the European Union&rsquo;s Classification, Labeling and Packaging of Chemicals (CLP) regulations. An update to the CLP regulations would impact how suppliers would have to classify and label TFA.&nbsp;&nbsp;</p> <p><span style="font-size: small;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Newsletter is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{FB443933-A262-48CE-8A92-5F0BE0352EB0}https://www.arnoldporter.com/en/perspectives/advisories/2026/06/fda-proposes-expedited-investigational-new-drug-pilot-programEva Temkinhttps://www.arnoldporter.com/en/people/t/temkin-evaeva.temkin@arnoldporter.comDaniel A. Kracovhttps://www.arnoldporter.com/en/people/k/kracov-daniel-adaniel.kracov@arnoldporter.comMahnu V. Davarhttps://www.arnoldporter.com/en/people/d/davar-mahnu-vmahnu.davar@arnoldporter.comAbeba Habtemariamhttps://www.arnoldporter.com/en/people/h/habtemariam-abebaAbeba.Habtemariam@arnoldporter.comCatherine A. Brandonhttps://www.arnoldporter.com/en/people/b/brandon-catherine-aCatherine.Brandon@arnoldporter.comJonathan Trinhhttps://www.arnoldporter.com/en/people/t/trinh-jonathanJonathan.Trinh@arnoldporter.comClaire W. Dennishttps://www.arnoldporter.com/en/people/d/dennis-claireclaire.dennis@arnoldporter.com<p>On June 22, 2026, the U.S. Department of Health and Human Services (HHS) unveiled Operation TrialBlazer, a department-wide effort to accelerate clinical research and development centered in the United States.[[N:U.S. Dep&rsquo;t of Health &amp; Human Servs., <em><a rel="noopener noreferrer" href="https://www.hhs.gov/sites/default/files/operation-trialblazer.pdf" target="_blank">Operation TrialBlazer</a></em> (June 2026); U.S. Dep&rsquo;t of Health &amp; Human Servs., Press Release, <em><a href="https://www.hhs.gov/press-room/hhs-launches-clinical-trials-reform-initiative.html">HHS Launches Unprecedented Department-Wide Effort to Restore American Leadership in Clinical Trials</a></em> (June 22, 2026).]] As part of that initiative, the U.S. Food and Drug Administration (FDA or the Agency) is taking multi-pronged actions to help facilitate early- and late-stage clinical development, including:</p>Wed, 24 Jun 2026 00:00:00 -0500<p>On June 22, 2026, the U.S. Department of Health and Human Services (HHS) unveiled Operation TrialBlazer, a department-wide effort to accelerate clinical research and development centered in the United States.[[N:U.S. Dep&rsquo;t of Health &amp; Human Servs., <em><a rel="noopener noreferrer" href="https://www.hhs.gov/sites/default/files/operation-trialblazer.pdf" target="_blank">Operation TrialBlazer</a></em> (June 2026); U.S. Dep&rsquo;t of Health &amp; Human Servs., Press Release, <em><a href="https://www.hhs.gov/press-room/hhs-launches-clinical-trials-reform-initiative.html">HHS Launches Unprecedented Department-Wide Effort to Restore American Leadership in Clinical Trials</a></em> (June 22, 2026).]] As part of that initiative, the U.S. Food and Drug Administration (FDA or the Agency) is taking multi-pronged actions to help facilitate early- and late-stage clinical development, including:</p> <ol> <li> proposing a pilot program intended to reduce the start-up time for first-in-human (FIH) clinical trials, as discussed herein; </li> <li> clarifying the chemistry, manufacturing, and controls (CMC) expectations for Investigational New Drug (IND) submissions to help sponsors efficiently generate and submit the phase-appropriate data needed to support phase 1 clinical trials; and </li> <li>issuing a significantly revised draft of FDA&rsquo;s critical Substantial Evidence Guidance that sets out regulatory expectations for sponsors regarding the type and quantity of data and information necessary to meet the statutory standard for &ldquo;substantial evidence&rdquo; of effectiveness in support of a drug or biological product application (see <a href="/en/perspectives/advisories/2026/06/fda-issues-revised-draft-guidance-on-demonstrating-substantial-evidence-of-effectiveness">Arnold &amp; Porter&rsquo;s Advisory, here</a>).[[N:Other FDA initiatives include adopting a risk-based approach toward nonclinical safety studies to relieve certain sponsors from conducting unnecessary animal testing, as well as evaluating strategies to minimize protocol amendments and ensure that protocol amendments do not delay clinical trials from continuing. Operation TrialBlazer, at 8-11 and 14; U.S. Food &amp; Drug Admin., <em><a rel="noopener noreferrer" href="https://www.fda.gov/industry/fda-actions-accelerate-and-modernize-early-and-late-stage-clinical-development" target="_blank">FDA Actions to Accelerate and Modernize Early and Late Stage Clinical Development</a></em> (June 22, 2026); U.S. Food &amp; Drug Admin., <em><a rel="noopener noreferrer" href="https://www.fda.gov/drugs/investigational-new-drug-ind-application/ind-applications-clinical-investigations-chemistry-manufacturing-and-control-cmc-information" target="_blank">IND Applications for Clinical Investigations: Chemistry, Manufacturing, and Control (CMC) Information</a></em> (updated June 22, 2026).]]</li> </ol> <p>The HHS Office of Inspector General is also evaluating whether to update the safe harbor regulations under the federal Anti-Kickback Statute or the exceptions to the civil monetary penalty provision prohibiting inducements to beneficiaries for remuneration provided to individuals in connection with their participation in clinical trials.[[N:<em>HHS Launches Unprecedented Department-Wide Effort to Restore American Leadership in Clinical Trials</em>; Medicare and State Health Care Programs: Fraud and Abuse; Request for Information Regarding the Federal Anti-Kickback Statute and Beneficiary Inducements CMP, 91 Fed. Reg. 37902, 37903 (June 24, 2026).]]</p> <p>HHS estimates that Operation TrialBlazer could cut in half the time it takes to conduct clinical trials in the U.S.[[N:Robert F. Kennedy, Jr. (@SecKennedy), <a href="https://x.com/SecKennedy/status/2069216603925786646"><em>Today, HHS launched a historic department-wide effort to strengthen America&rsquo;s clinical research enterprise and ensure the next generation of medical breakthroughs is developed right here&hellip;.</em></a>, X (June 22, 2026).]] FDA believes that targeting the earliest development stage (i.e., Phase 1) alone could shave 6 to 12 months off a drug program&rsquo;s overall development timeline.[[N:<em>HHS Launches Unprecedented Department-Wide Effort to Restore American Leadership in Clinical Trials</em>; Robert F. Kennedy, Jr., <em><a rel="noopener noreferrer" href="https://www.foxnews.com/opinion/robert-f-kennedy-jr-future-medicine-built-america" target="_blank">The Future of Medicine Will Be Built in America</a></em>, Fox News (June 22, 2026).]]</p> <p>FDA&rsquo;s proposed Expedited-IND Pilot program is aimed at reversing a trend of clinical research and development moving abroad, namely to China. China surpassed the U.S. for the global share of phase 1 clinical trials in 2021 and has continued to extend its lead in the number of early-stage trials globally.[[N:<em>Operation TrialBlazer</em>, at 4; Kennedy, <em>supra</em> note 3; <em>see also </em>Jim Cornall, <em><a rel="noopener noreferrer" href="https://www.labiotech.eu/trends-news/report-china-leads-phase-1-clinical-trials/" target="_blank">Report: China Leads the Way With Phase 1 Studies, Labiotech</a></em> (Feb. 17, 2023).]] Operation TrialBlazer recognizes that China is gaining this competitive advantage since streamlining its regulatory pathways and strengthening its clinical trial infrastructure, which attract sponsors and investment for conducting clinical trial research.[[N:<em>Operation TrialBlazer</em>, at 4.]]</p> <p>Various ideas have spread throughout the government and industry on how to reverse the trend.[[N:<em>See</em>, <em>e.g.</em>, <a rel="noopener noreferrer" href="https://reaganudall.org/sites/default/files/2026-06/Enhancing Early-Stage Drug Development in the US_1.pdf" target="_blank">Reagan-Udall Found., Enhancing Early-Stage Drug Development in the United States</a> (June 2026) (providing recommendations and solutions to modernize the early-stage clinical trial ecosystem in the U.S.).]] U.S. congressmembers have called for legislation that, if enacted, would prohibit FDA from accepting, reviewing, or considering certain clinical data generated in China in support of an IND, noting concerns with patient safety standards, human rights, and independence from government influence.[[N:<a rel="noopener noreferrer" href="https://docs.house.gov/meetings/AP/AP00/20260429/119253/HMKP-119-AP00-20260429-SD003.pdf" target="_blank">Manager&rsquo;s Amendment, H.R. Comm. on Appropriations, Subcomm. on Agric., Rural Dev., Food &amp; Drug Admin., &amp; Related Agencies, FY 2027 Agriculture Appropriations Bill Markup 7</a> (Apr. 29, 2026).]] FDA has asked Congress to create an expedited IND pathway in its fiscal year 2027 budget request.[[N:U.S. Food &amp; Drug Admin., <a rel="noopener noreferrer" href="https://www.fda.gov/media/191778/download" target="_blank">Fiscal Year 2027 Justification of Estimates for Appropriations Committees 26-27</a> (2026).]] There have been calls for additional reforms to Institutional Review Boards (IRBs),[[N:Zachary Brennan, <em><a rel="noopener noreferrer" href="https://endpoints.news/makary-pushes-for-irb-reforms-to-catch-chinas-speedy-trial-starts/" target="_blank">Makary Pushes for IRB Reforms to Catch China&rsquo;s Speedy Trial Starts</a></em>, Endpoints News (Mar. 16, 2026); <em>see also Operation TrialBlazer</em>, at 11-12.]] to the way that FDA conducts clinical trial inspections in China,[[N:<em>See</em> Jessica Karins, <em><a rel="noopener noreferrer" href="https://insidehealthpolicy.com/daily-news/lawmakers-call-more-fda-scrutiny-chinese-clinical-trial-sites" target="_blank">Lawmakers Call For More FDA Scrutiny Of Chinese Clinical Trial Sites</a></em>, InsideHealthPolicy (Aug. 21, 2024).]] and to strengthen human subject protections for clinical trials conducted in China.[[N:<a rel="noopener noreferrer" href="https://www.rickscott.senate.gov/services/files/F16597A1-7153-4615-AA22-19CAAFBBED71" target="_blank">Letter from Sen. Rick Scott, U.S. Senator, to Robert F. Kennedy, Jr., Sec&rsquo;y of Health &amp; Hum. Servs., Martin Makary, Comm&rsquo;r of U.S. Food &amp; Drug Admin., &amp; Jay Bhattacharya, Dir., Nat&rsquo;l Insts. of Health</a> (Mar. 19, 2026).]] Prescription Drug User Fee Act (PDUFA) VIII has included discussions of user fee incentives for domestic drug development&mdash;as well as potentially higher fees for applications that do not include domestic clinical trial data.[[N:<em>See</em> U.S. Food &amp; Drug Admin. &amp; Industry Steering Comm., Prescription Drug User Fee Act (PDUFA) Reauthorization Meeting (meeting notes from March 10, 12, and 19, 2026) (collectively describing FDA&rsquo;s proposal).]] FDA&rsquo;s new Expedited-IND Pilot program proposes to pull more trials to the U.S. by expediting IND clearance for FIH clinical trials.</p> <h2>A Proposed Path to Expedite the First-in-Human Milestone</h2> <p>On June 24, 2026, FDA opened a request for information (RFI) to solicit stakeholder input on the proposed Expedited-IND Pilot program.[[N:Expedited Investigational New Drug Pilot Program; Request for Information, 91 Fed. Reg. 37996, 37996 (June 24, 2026).]] The Expedited-IND Pilot program would establish a network of &ldquo;Qualified Research Institutions&rdquo; (QRIs) that would assess information required to be included in an initial IND submission (i.e., pharmacology and toxicology, clinical, and CMC information)[[N:<em>See </em>21 C.F.R. &sect; 312.23.]] and make recommendations&mdash;potentially as part of a rolling review of IND materials. </p> <p>While there will undoubtedly be legal questions as to the basis for FDA&rsquo;s reliance on QRIs, FDA is clear that it would retain full regulatory oversight of the IND submission, including the authority to impose a clinical hold, disqualify an investigator or IRB, conduct clinical trial inspections, and enforce safety reporting requirements.[[N:91 Fed. Reg. at 37998.]] QRIs would only act as a &ldquo;review and advisory resource&rdquo; to sponsors (sponsors would remain responsible for their IND submissions).[[N: <em>Id.; Operation TrialBlazer</em>, at 11.]] But QRIs would be expected to expedite overall review timelines by improving the quality of IND submissions, reducing the likelihood that FDA imposes a clinical hold, reducing the time for FDA to review INDs, bridging between IRBs and FDA, and potentially making recommendations to FDA that would reduce the regulatory burden associated with IND review.[[N:91 Fed. Reg. at 37998.]] The RFI seeks input regarding the types of tasks QRIs could take on and how these processes might be structured. </p> <p>As currently proposed in the RFI, QRIs would be responsible for:</p> <ul> <li> advising and providing written recommendations to sponsors on the nonclinical (pharmacology and toxicology), clinical, and CMC components of sponsors&rsquo; IND submissions;</li> <li>conducting conflict of interest screening and establishing a formal engagement agreement with the sponsor;</li> <li>holding regular meetings with the sponsor and appropriate subject matter experts to discuss IND development progress;</li> <li>maintaining records of discussions, recommendations, and interactions with sponsors;</li> <li>sharing their recommendations with FDA through the rolling submission platform (discussed below); and</li> <li>participating in pilot evaluation activities and supporting parallel activities, such as IRB review and clinical trial site activation.[[N:<em>Id.</em>]]</li> </ul> <p>To be qualified, a potential QRI would need to demonstrate capabilities, infrastructure, and leadership expertise across nonclinical, clinical, and CMC disciplines, regulatory affairs, and clinical trials relevant to FIH IND submissions and Phase 1 studies.[[N:<em>Id.</em> at 37998-99.]] FDA indicates that QRIs may need to obtain a formal certification from the Agency after the pilot concludes.[[N:<em>Id.</em> at 37998.]]</p> <p>As part of the RFI, FDA also seeks input regarding a proposed rolling submission platform through which FDA could review QRI recommendations to the completed components of a sponsor&rsquo;s IND submission before the final IND submission.[[N:<em>Id.</em>]] FDA likens the rolling review process to the rolling review of a New Drug Application or Biologics License Application under existing expedited review programs.[[N:<em>Id.</em>]] FDA believes that rolling review would afford the Agency an earlier opportunity to resolve potential deficiencies that would result in a clinical hold or information request, and to sooner issue the sponsor a &ldquo;safe to proceed&rdquo; letter authorizing the FIH study to commence.[[N:<em>Id.</em>]] Barring a &ldquo;safe to proceed letter&rdquo; or clinical hold, a sponsor must wait 30 days from the date that FDA receives an IND to begin a clinical study.[[N:21 C.F.R. &sect; 312.40(b). ]]</p> <p>FDA believes that accelerating the time to reach FIH milestones would also help biopharmaceutical companies secure key partnerships, attract greater investment in biomedical research in the U.S., and bring new therapies and cures to Americans more quickly.[[N:91 Fed. Reg. at 37997.]]</p> <h2>The RFI Provides Opportunities to Shape the Expedited-IND Pilot Program</h2> <p>FDA seeks extensive stakeholder input on the contours of the Expedited-IND Pilot program and the qualifications and responsibilities of QRIs.[[N:<em>See id.</em> at 37999.]] We suggest that stakeholders consider engaging in the RFI process to offer feedback on the details of the pilot program&mdash;some potential areas are highlighted below&mdash;before FDA readies the program for a premiere. If finalized, the program&rsquo;s frameworks may necessitate a shift in thinking in conventional clinical research agreements, including sponsor relationships with IRBs, academic medical centers, and central labs, and require new approaches to delegation of authority documents and clinical research organization arrangements. For example, if adopted, the proposals could lead to a race for centers to become qualified QRIs and for sponsors and other parties to contract with those centers first, raising important questions about capacity, quality, and liability.</p> <p>Interested parties can submit comments on the proposed Expedited-IND Pilot program through July 22, 2026,[[N:<em>Id. </em>at 37997.]] including comments regarding: </p> <ul> <li><em>Scope and scale</em> &ndash; e.g., how many QRIs and therapeutic areas/modalities should be included in the pilot program? How long should the pilot program last, or what volume of participation is appropriate before the pilot program is evaluated?</li> <li><em>QRI qualifications and capabilities</em> &ndash; e.g., what changes, if any, should be made to the recommended capabilities, infrastructure, and/or leadership expertise for QRIs? Should QRIs be required to have a self-owned and operated IRB and/or clinical trial site? If a QRI also serves as an IRB for a sponsor, how can potential conflicts of interest be prevented?</li> <li> <em>Drug eligibility </em>&ndash; e.g., which types of products and/or specific diseases or conditions should be considered for the pilot program? How should they be prioritized for participation? </li> <li><em>Pre-IND and IND review process</em> &ndash; e.g., what should be the output of QRI advice and review? What information from this review should be submitted to FDA?</li> <li> <em>Oversight and accountability</em> &ndash; e.g., how should FDA resolve situations in which it disagrees with QRI recommendations? </li> <li> <em>Risks to patients</em> &ndash; e.g., does the pilot program inadvertently compromise the safety of trial participants, the scientific rigor of the trial, or ethical standards of the trial? How can FDA mitigate these risks?</li> </ul> <p style="text-align: center;">***</p> <p>If you have any questions, would like more information, or would like to discuss submitting a comment to FDA&rsquo;s RFI (by July 22, 2026), FDA&rsquo;s 2026 Draft Substantial Evidence Guidance (by September 22, 2026), or the Office of Inspector General&rsquo;s RFI (by August 24, 2026), please reach out to one of the authors of this Advisory or your existing Arnold &amp; Porter contacts.</p>{80FD4F1D-A5E3-48A1-B7D0-92AB79659B3D}https://www.arnoldporter.com/en/perspectives/events/2026/06/arnold-porters-2026-seattle-consumer-products-retail-tech-forumDonal M. O'Brienhttps://www.arnoldporter.com/en/people/o/obrien-donal-mdonal.obrien@arnoldporter.comRaqiyyah Pippinshttps://www.arnoldporter.com/en/people/p/pippins-raqiyyahraqiyyah.pippins@arnoldporter.comTodd L. Nunnhttps://www.arnoldporter.com/en/people/n/nunn-toddTodd.Nunn@arnoldporter.comWilliam Hallett Efronhttps://www.arnoldporter.com/en/people/e/efron-william-hallettwilliam.efron@arnoldporter.comMeredith Osbornhttps://www.arnoldporter.com/en/people/o/osborn-meredithmeredith.osborn@arnoldporter.comDaniel E. Raymondhttps://www.arnoldporter.com/en/people/r/raymond-danieldaniel.raymond@arnoldporter.comSheena Thomashttps://www.arnoldporter.com/en/people/t/thomas-sheenasheena.thomas@arnoldporter.comLori B. Leskinhttps://www.arnoldporter.com/en/people/l/leskin-lori-blori.leskin@arnoldporter.comPaul W. Sweeney, Jr.https://www.arnoldporter.com/en/people/s/sweeney-jr-paul-wpaul.sweeney@arnoldporter.comSheila S. Bostonhttps://www.arnoldporter.com/en/people/b/boston-sheila-ssheila.boston@arnoldporter.comE. Alex Beroukhimhttps://www.arnoldporter.com/en/people/b/beroukhim-e-alexalex.beroukhim@arnoldporter.comWilson D. Mudgehttps://www.arnoldporter.com/en/people/m/mudge-wilson-dWilson.Mudge@arnoldporter.comLynn Fischer Foxhttps://www.arnoldporter.com/en/people/f/fischer-fox-lynnlynn.fischerfox@arnoldporter.comAshley E. Gammellhttps://www.arnoldporter.com/en/people/g/gammell-ashleyAshley.Gammell@arnoldporter.comSean M. SeLeguehttps://www.arnoldporter.com/en/people/s/selegue-sean-msean.selegue@arnoldporter.comS. Michael Gentinehttps://www.arnoldporter.com/en/people/g/gentine-s-michaelmike.gentine@arnoldporter.comArnold &amp; Porter invites you to our inaugural Seattle Consumer Products, Retail, &amp; Tech Forum, a half-day program built for legal and business leaders in the consumer products, retail, and tech industries navigating a rapidly shifting state and federal regulatory landscape.&nbsp;Tue, 23 Jun 2026 00:00:00 -0500<p>Arnold &amp; Porter invites you to our inaugural Seattle Consumer Products, Retail, &amp; Tech Forum, a half-day program built for legal and business leaders in the consumer products, retail, and tech industries navigating a rapidly shifting state and federal regulatory landscape. Hosted in the U.S. Bank Center, where our Seattle office is located, the forum brings together Arnold &amp; Porter attorneys from across the country alongside senior in-house leaders, including <strong>Marissa John, General Counsel of the Seattle Seahawks, Jolene Marshall, <span>Chief Legal Officer of HighLevel</span>, Zabrina Jenkins, former General Counsel of Starbucks</strong>, and<strong> Sara Gattie, Chief Risk Officer of Providence</strong>, for an afternoon of candid conversation, practical insight, and networking.</p> <p>The program will open with a networking lunch and a fireside chat featuring <strong>Laura Clinton, <span>Consumer Protection Division Chief, Washington State Attorney General&rsquo;s Office</span></strong>, whose office has been at the forefront of consumer protection enforcement in the region, reflecting the increasingly important role state attorneys general are playing alongside federal regulators.</p> <p>The forum will then feature panel discussions that address the legal and business challenges shaping the consumer products, retail, and technology sectors, including:</p> <ul> <li>Ethics in artificial intelligence</li> <li>Data &amp; privacy</li> <li>Consumer protection, UDAP litigation, &amp; advertising trends</li> <li>Pricing, antitrust, tariffs, &amp; algorithmic regulation</li> <li>Consumer product compliance and regulatory enforcement trends</li> </ul> <p>A networking reception with drinks and passed hors d&rsquo;oeuvres will follow. We look forward to seeing you in Seattle.</p>{1C9BE326-8AF4-4425-A093-1D8BFCB04ABA}https://www.arnoldporter.com/en/perspectives/advisories/2026/06/judicial-foreclosure-and-receivership-as-alternative-remedies-for-washington-lenders-after-vargasRhys W. Heftahttps://www.arnoldporter.com/en/people/h/hefta-rhysrhys.hefta@arnoldporter.comMatthew J. Michelihttps://www.arnoldporter.com/en/people/m/micheli-matthew-jmatthew.micheli@arnoldporter.comAaron E. Millsteinhttps://www.arnoldporter.com/en/people/m/millstein-aaron-eAaron.Millstein@arnoldporter.comKari L. Larsonhttps://www.arnoldporter.com/en/people/l/larson-kari-lKari.Larson@arnoldporter.comChristian Scarletthttps://www.arnoldporter.com/en/people/s/scarlett-christianchristian.scarlett@arnoldporter.comOwen S. Haneyhttps://www.arnoldporter.com/en/people/h/haney-owenowen.haney@arnoldporter.comOn April 30, 2026, the Washington Supreme Court ruled in <em>Vargas v. RRA CP Opportunity Trust 1</em>&nbsp;that only a &ldquo;holder&rdquo; of a negotiable instrument, as contemplated by the Uniform Commercial Code (UCC), can satisfy the prerequisites for conducting a nonjudicial trustee&rsquo;s sale of property under the Washington Deed of Trust Act (DTA).Tue, 23 Jun 2026 00:00:00 -0500<p>On April 30, 2026, the Washington Supreme Court ruled in <em>Vargas v. RRA CP Opportunity Trust 1</em>[[N: <em>Marquez Vargas v. RRA CP Opportunity Tr. 1</em>, No. 103735-0, 2026 WL 1174062 (Apr. 30, 2026).]]&nbsp;that only a &ldquo;holder&rdquo; of a negotiable instrument, as contemplated by the Uniform Commercial Code (UCC), can satisfy the prerequisites for conducting a nonjudicial trustee&rsquo;s sale of property under the Washington Deed of Trust Act (DTA). As we explained in our <a href="/en/perspectives/advisories/2026/05/washington-supreme-court-limits-remedy-of-nonjudicial-foreclosure">earlier advisory</a>&nbsp;examining that decision, <em>Vargas</em> appears to eliminate the remedy of nonjudicial foreclosure for Washington lenders engaged in a broad range of commercial transactions, including deeds of trust securing certain credit agreements, bond indentures, letters of credit, guaranties, construction loans, and other instruments that, by their nature, provide for a variable principal amount that cannot be specified at the time of their inception. In the wake of <em>Vargas</em>, lenders should be familiar with the primary alternative remedies available under Washington law: judicial foreclosures and receiverships.</p> <h2>Judicial Foreclosure</h2> <p>The most direct alternative to a nonjudicial trustee&rsquo;s sale is a judicial foreclosure of the deed of trust as a mortgage under Washington&rsquo;s judicial foreclosure statute, Revised Code of Washington (RCW) 61.12. Judicial foreclosure is a well-established remedy, but it is critical for lenders to consider the process, its practical limitations, and the constraints it places on a lender after the sale.</p> <h3>The Process</h3> <p>To initiate a judicial foreclosure, the lender files a complaint in the appropriate Superior Court (a Washington state trial court) naming all parties with an interest in the property, including all owners, mortgagors, guarantors, junior lienholders, tenants, and the United States if a federal tax lien exists. </p> <p>The complaint should describe the circumstances of the borrower&rsquo;s default, the key terms of the loan documents, a legal description of the property, and the full range of relief the lender seeks, including the right to bid at the foreclosure sale and the right to pursue a deficiency judgment. The lender should also record a notice of <em>lis pendens</em> in the county where the property is located to provide constructive notice of the action and bind third parties to the outcome of the litigation.[[N: <em>See </em>RCW 4.28.320.]]</p> <p>The lender must then prosecute the litigation. If successful, the lender will obtain a judgment of foreclosure and can then request an order of sale from the county clerk, which authorizes the sheriff&rsquo;s office to conduct a public auction after at least 30 days&rsquo; notice to the judgment debtor.[[N:&nbsp;<em>See</em> RCW 6.21.030 (detailing notice of sale requirements).]]</p> <p>After the auction, the sheriff delivers a copy of the certificate of sale to the purchaser, which reflects the price paid and whether the property is subject to a right of redemption.[[N: <em>See</em> RCW 6.21.100. No right of redemption exists if the property has been improved by a structure, is not used for agricultural purposes, and the court determines it has been abandoned for six months.]]</p> <p>Before the sale may be finalized, the court must confirm it. Before ordering or confirming the sale, the court may hold a hearing to fix an &ldquo;upset price&rdquo; representing the property&rsquo;s minimum value, and may decline to confirm a sale that fails to meet that threshold.[[N: <em>See</em> RCW 61.12.060. If the court does not set an upset price before confirmation, the court may hold a hearing to establish the property&rsquo;s value and, as a condition to confirmation, require that the fair value of the property be credited upon the foreclosure judgment. <em>Id</em>.]] Only after confirmation does the court order disbursement of proceeds to lienholders in order of priority.</p> <h3>Practical Implications: Time, Cost, and Unpredictability</h3> <p>Compared to nonjudicial foreclosure, judicial foreclosure adds procedural complexity, time, and expense. A judicial foreclosure requires litigation, can result in contested proceedings, and typically takes longer to complete than a nonjudicial trustee&rsquo;s sale. The time to implement a judicial foreclosure may increase if the volume of such actions increases materially in the wake of <em>Vargas</em>.</p> <p>The expense of litigation is also a factor to be considered. Judicial foreclosure requires the lender to bear the costs of filing, service, title search, legal fees, and the attendant costs if the matter is contested. While some of these costs, or the equivalent, would also be incurred in a nonjudicial trustee&rsquo;s sale, it is reasonable to anticipate that the costs incurred in connection with a judicial foreclosure will be significantly higher.</p> <h3>The Right of Redemption: A Critical Constraint on Post-Sale Strategy</h3> <p>The most significant practical limitation of judicial foreclosure is the borrower&rsquo;s statutory right of redemption. Under RCW 6.23.020, borrowers are generally entitled to redeem the property for a period of one year following the completion of a judicial sale.[[N: The redemption period ends eight months after the sale if the lender waives its right to collect a deficiency and the property is not used for agricultural purposes. RCW 6.23.020(1).]] This right is not merely procedural; it has practical implications for what a lender can do with the property it acquires at a foreclosure sale.</p> <p>During the redemption period, the borrower may reacquire the property by paying the full amount of the outstanding debt as of the time of sale, plus interest, taxes, and certain assessments. Critically, the borrower may exercise this right even if the property has been sold or transferred to a third party following the sale.[[N: RCW 6.23.020(1)-(2) (setting forth requirements to redeem from the purchaser).]] This statutory right of redemption may only be relinquished in limited circumstances and cannot be assigned as a naked right free from the redemptioner&rsquo;s underlying interest in the property. [[N: <em>See</em> footnote 5 describing the limited circumstances of voluntary relinquishment.]][[N: <em>Performance Constr., LLC v. Glenn</em>, 195 Wash. App. 406, 417 (2016)(&ldquo;[R]eal property can only be conveyed by a valid deed and a valid transfer of an interest in the property&rsquo;s title is necessary to transfer the right of redemption.&rdquo;)]]The right of redemption thus creates a cloud on title that can impair the marketability of the property and the price achieved at the foreclosure sale.</p> <p>The right of redemption also creates substantial operational and financial risk for lenders who acquire property at a judicial sale. With very limited exceptions, the owner of the property during the redemption period (the lender or a third-party purchaser) is not entitled to compensation for appreciation in the value of the property or investments made to operate, maintain, or improve the property after the foreclosure sale through the time of redemption. This risk can be particularly acute for properties that require ongoing operational expenditures, capital investment, or completion of construction. </p> <h3>The Benefits of a Judicial Foreclosure </h3> <p>There are potential benefits related to the judicial foreclosure process that merit consideration. First, in a judicial foreclosure, the lender is entitled to a deficiency judgment under RCW 61.12.080, which enables the lender to pursue guarantors and other obligors for any deficiency in the amount it recovers in the sale. The right to pursue guarantors and other obligors for a deficiency judgment following a nonjudicial trustee&rsquo;s sale in Washington is more limited. Second, the lender may attend and credit bid its claim at the public auction. Third, the lender may request a money judgment against the judgment debtor, guarantor, or other obligor. The lender should request each of the foregoing types of relief in the foreclosure complaint.</p> <h2>Receivership </h2> <p>To the extent that a judicial foreclosure is not a practical remedy in light of the costs, time, and risks associated with the redemption right, the appointment of a general receiver with the power of sale under RCW 7.60 (the Washington State Receivership Act, or WSRA) is a potentially valuable alternative. A receivership provides a flexible, court-supervised process that can replicate the practical benefits of a nonjudicial foreclosure and provide other tools that may be unavailable in either the judicial or nonjudicial foreclosure context.</p> <h3>Types of Receivers and Initiating the Process</h3> <p>Under the WSRA, a receiver may be either &ldquo;custodial&rdquo; or &ldquo;general&rdquo; in nature. A custodial receiver administers only select assets designated by the court. By contrast, a general receiver displaces management of the subject business or property entirely and is empowered to administer and dispose of all estate assets for the benefit of the estate.[[N: Although the Washington receivership statute does not define &ldquo;estate assets,&rdquo; an order appointing a general receiver over all estate assets would include &ldquo;all right, title, and interests, both legal and equitable, . . . in or with respect to any property of a person with respect to which a receiver is appointed . . . .&rdquo;<em> See</em> RCW 7.60.005(3), (9). To resolve the administration of property beyond the jurisdiction of the court, the receiver may bring ancillary proceedings in&nbsp;foreign jurisdictions requesting recognition of the Washington receivership.<em> See</em> RCW 7.60.270(1).]] For lenders seeking to maximize control and flexibility in a distressed scenario, appointment of a general receiver will ordinarily be the preferred option.</p> <p>Receivership proceedings are initiated by filing a petition in the appropriate Superior Court. The petition must identify the type of receiver sought, the grounds for appointment, and the identity of the proposed receiver.[[N: A receiver may not be, among other things, &ldquo;a party to the action, a . . . director, officer, agent, attorney, employee, secured or unsecured creditor or lienor of, or holder of any equity interest in . . . the person whose property is to be held by the receiver . . . .&rdquo; RCW 7.60.035.]] It should be supported by declarations from the petitioner and the prospective receiver establishing the factual basis for the appointment and the receiver&rsquo;s qualifications. The receiver must post bond in an amount set by the court before assuming its duties.[[N: <em>See</em> RCW 7.60.045.]] The WSRA provides thirty-three distinct statutory grounds upon which a receiver may be appointed,[[N: <em>See</em> RCW 7.60.025(1)(a)-(nn).]] including, among others: danger of material loss or injury to the property or its revenue-producing potential (RCW 7.60.025(1)(b)(i)); the need to enforce an assignment of rents (RCW 7.60.025(1)(b)(ii)); the need to preserve and protect property pending execution (RCW 7.60.025(1)(e)); and insolvency or imminent danger of insolvency (RCW 7.60.025(1)(i)). The WSRA also allows for the appointment of a receiver where such appointment &ldquo;is provided for by agreement&rdquo; (RCW 7.60.025(1)(b)(ii)). Except where appointment is expressly mandated by statute, the court may only appoint a receiver if it finds that appointment is &ldquo;reasonably necessary&rdquo; and that other available remedies are inadequate. <em>See</em> RCW 7.60.025(1).</p> <h3>Key Powers of a General Receiver</h3> <p>Once appointed, a general receiver under the WSRA exercises a broad range of powers that can be of substantial benefit to lenders and can operate in ways that parallel certain protections available under the United States Bankruptcy Code.</p> <p><em>Automatic Stay</em>. Under RCW 7.60.110, the entry of an order appointing a receiver automatically stays for sixty days, among other actions, the commencement or continuation of legal proceedings against the receivership estate, the enforcement of judgments, and any act to obtain possession of or interfere with estate property. The stay may be extended by the court for good cause shown. This breathing spell can help protect a lender&rsquo;s rights and collateral by halting the efforts of competing creditors, preventing the dissipation of assets, and creating an environment in which the lender can assess the property and formulate a strategy without the pressure of parallel enforcement actions.</p> <p><em>Management Displacement and Operational Control</em>. A general receiver appointed over an operating business or property has authority to &ldquo;do all things which the owner of the business or property might do in the ordinary course of the operation of the business,&rdquo; including purchasing goods, incurring expenses, and paying certain pre-receivership claims.[[N: RCW 7.60.060.]] The receiver may compel by subpoena any person to submit to examination and may demand, under threat of contempt of court, the turnover of estate property. These powers allow lenders to replace management, stabilize the property&rsquo;s operations, and seek a value-maximizing disposition without the delays and uncertainties of litigation.</p> <p><em>Free and Clear Sales</em>. Perhaps the most compelling feature of the receivership remedy for lenders confronting the limitations of judicial foreclosure is the general receiver&rsquo;s authority to conduct sales free and clear of liens and rights of redemption. Following notice and a hearing, a court may order the sale of property &ldquo;free and clear of liens and rights of redemption . . . whether or not the sale will generate proceeds sufficient to fully satisfy all claims secured by the property.&rdquo;[[N:&nbsp;See RCW 7.60.260.]] The receivership statute eliminates the right of redemption that attaches to judicial sales. Security interests encumbering the property transfer and attach to the proceeds of the sale, net of the receiver&rsquo;s reasonable expenses incurred in the disposition of the property.[[N: It should be noted that the authority to sell free and clear does not extend to homesteads, property used in agriculture, or, if a creditor objects, sales likely to recover less than the property would realize in a reasonable time absent the sale.]]</p> <p><em>Credit Bidding</em>. As in bankruptcy proceedings, a secured creditor may credit bid its claims at a receiver&rsquo;s sale, provided it can satisfy, in cash, all secured claims senior to its secured claims in full.[[N: RCW 7.60.260(3).]]</p> <p><em>Deficiency Judgments</em>. The WSRA does not prohibit lenders from pursuing deficiency judgments following a receiver&rsquo;s sale.[[N: The Washington Court of Appeals has twice rejected arguments that the WSRA precludes a secured creditor from pursuing a post-sale deficiency judgment. <em>See Umpqua Bank v. Shasta Apartments, LLC</em>, 194 Wash. App. 685 (2016); <em>MUFG Union Bank, N.A. v. Campadore</em>, 198 Wash. App. 1006 (2017).]] </p> <p><em>Receivership Financing</em>. A general receiver may seek court approval for receivership financing secured by estate property,[[N: The receiver may also obtain unsecured credit in the ordinary course of business without court authorization. See RCW 7.60.140.]]&nbsp;enabling the receiver to fund necessary operations, repairs, or improvements during the pendency of the receivership. </p> <h3>Potential Limitations of Receivership</h3> <p>Receivership is not without its drawbacks, and lenders should weigh these against the potential advantages.</p> <p><em>Cost and Administrative Burden</em>. Receivers may retain attorneys, accountants, and other professionals whose fees and costs constitute administrative expenses that must be paid in full before any distributions to creditors. Receivers must also prepare a final report cataloging all receipts and disbursements before they may be discharged by the court. In complex cases, these costs can add up and may reduce the net recovery available to the lender.</p> <p><em>Court Supervision and Unpredictability</em>. Receivership proceedings are public and court-supervised. All parties with an interest in estate property or in the proceedings may appear and be heard on almost any issue, which borrowers can use to complicate the proceedings and cause delay.</p> <p>The collective and widely publicized nature of a receivership can complicate a lender&rsquo;s strategy, invite competing claims, and generate unforeseen litigation.</p> <p><em>No Prohibition on Filing Bankruptcy</em>. Nothing in the WSRA forbids an entity from seeking bankruptcy protection while under receivership. Nevertheless, an order appointing a general receiver may divest the officers and directors of the company of the requisite authority to file bankruptcy petitions on the company&rsquo;s behalf.[[N: <em>See In re Sino Clean Energy, Inc.</em>, 901 F.3d 1139 (9th Cir. 2018). If the bankruptcy petition succeeds, the receiver must turnover property to the bankruptcy trustee and file an accounting of property that came into its possession with the bankruptcy court. 11 U.S.C. &sect; 543(b).]] In any case, an unauthorized bankruptcy filing may lead to unwanted litigation and expense for the receivership estate.</p> <h2>Conclusion</h2> <p>In the wake of <em>Vargas</em>, lenders should carefully consider the strategic implications of the available alternatives for resolving distressed scenarios in Washington. Judicial foreclosures and receiverships are both powerful tools, and post-<em>Vargas</em>, we expect that receiverships will increasingly be relied upon by lenders. </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{F6E7E2C5-0A4A-4BD4-B2D9-2E00620E6BCF}https://www.arnoldporter.com/en/perspectives/events/2026/06/us-fto-designations-of-brazilian-criminal-organizations-legal-complianceCarlos Lobohttps://www.arnoldporter.com/en/people/l/lobo-carloscarlos.lobo@arnoldporter.comAmbassador Thomas A. Shannon, Jr.https://www.arnoldporter.com/en/people/s/shannon-thomastom.shannon@arnoldporter.comJohn P. Barkerhttps://www.arnoldporter.com/en/people/b/barker-john-pjohn.barker@arnoldporter.comTal R. Machneshttps://www.arnoldporter.com/en/people/m/machnes-tal-rTal.Machnes@arnoldporter.comEric Snyderhttps://www.arnoldporter.com/en/people/s/snyder-ericeric.snyder@arnoldporter.comArnold &amp; Porter invites you to a complimentary briefing on a fast-moving development with significant implications for businesses operating in Brazil.Mon, 22 Jun 2026 00:00:00 -0500<p>Arnold &amp; Porter invites you to a complimentary briefing on a fast-moving development with significant implications for businesses operating in Brazil. On May 28 and June 5, 2026, the U.S. Department of State designated two of Brazil&rsquo;s largest criminal organizations, Primeiro Comando da Capital (PCC) and Comando Vermelho (CV), as Specially Designated Global Terrorists (SDGTs) and Foreign Terrorist Organizations (FTOs), respectively. These are the first Brazilian entities to be placed on the U.S. FTO list, following similar designations of eight Mexican and Latin American criminal organizations in February 2025, and reflect a broader shift in U.S. policy toward addressing drug trafficking threats through a counterterrorism framework, with significant downstream legal and commercial risks.</p> <p>The consequences are immediate and far-reaching: asset freezes, prohibitions on transactions with any nexus to the United States, potential civil liability under the Anti-Terrorism Act, criminal liability for providing material support to either organization, including through supply chains and third-party relationships, among others. Companies operating in Brazil, particularly in financial services, energy, logistics, and construction, face direct exposure.</p> <p>Our panel will address the following:</p> <ul> <li>The geopolitical context: the PCC and CV designations within the Trump Administration&rsquo;s broader counterterrorism strategy in Latin America, and what to expect next.</li> <li>SDGT v. FTO: the distinct legal frameworks, OFAC compliance obligations, and what the designations mean for U.S. and non-U.S. companies with Brazil exposure.</li> <li>Scope of the material support prohibition and related compliance obligations, including supply chain and third-party exposure.</li> <li>Indirect exposure risks: how liability can arise through intermediaries, customers, and financial flows&mdash;even without direct dealings with designated organizations.</li> <li>Criminal enforcement dimensions: DOJ prosecution strategy, corporate liability, and lessons from prior FTO enforcement actions.</li> </ul> <p>The briefing will be followed by a Q&amp;A session. Please send any questions or topics you would like the panel to address to <a href="mailto:carlos.lobo@arnoldporter.com">carlos.lobo@arnoldporter.com</a> in advance. Arnold &amp; Porter hopes you will join us!</p> <h2>Speakers</h2> <ul> <li><strong>Carlos Lobo</strong></li> Partner, Corporate &amp; Finance | Latin America &amp; Caribbean<br /> Arnold &amp; Porter, New York<br /> <em>Introduction &amp; Moderator</em><br /> <br /> <li><strong>Ambassador Thomas A. Shannon, Jr.</strong></li> Senior International Policy Advisor, Global Law &amp; Public Policy | Latin America &amp; Caribbean<br /> Arnold &amp; Porter, Washington, D.C.<br /> <em>Former Under Secretary of State for Political Affairs; former U.S. Ambassador to Brazil</em><br /> <br /> <li><strong>John P. Barker</strong></li> Partner, Government Contracts and National Security | Export Controls &amp; Sanctions | Latin America &amp; Caribbean<br /> Arnold &amp; Porter, Washington, D.C.<br /> <em>Former Deputy Assistant Secretary of State for Export Controls</em><br /> <br /> <li><strong>Tal R. Machnes</strong></li> Counsel, White Collar Defense &amp; Investigations | OFAC &amp; Export Controls<br /> Arnold &amp; Porter, New York<br /> <br /> <li><strong>Eric Snyder</strong></li> Partner, White Collar Defense &amp; Investigations | Latin America &amp; Caribbean<br /> Arnold &amp; Porter, New York<br /> <em>Former Assistant U.S. Attorney, Southern District of New York</em><br /> <br /> </ul>{8846DE46-DA15-4CF2-BC4F-020BE8161C81}https://www.arnoldporter.com/en/perspectives/news/2026/06/stephanie-kang-rejoins-arnold-porter-los-angeles-litigation-teamArnold &amp; Porter announced today that Stephanie Kang has rejoined the firm&rsquo;s Complex Litigation practice as counsel, resident in Los Angeles, continuing the firm&rsquo;s West Coast growth.Mon, 22 Jun 2026 00:00:00 -0500<p>Arnold &amp; Porter announced today that Stephanie Kang has rejoined the firm&rsquo;s Complex Litigation practice as counsel, resident in Los Angeles, continuing the firm&rsquo;s West Coast growth.</p> <p>Stephanie previously spent more than eight years at Arnold &amp; Porter, representing clients in complex commercial litigation in state and federal courts. She has extensive experience in all stages of litigation, including case strategy, discovery, depositions, motions, trial preparation, settlements, and appeals. Stephanie has since served as Deputy General Counsel, Litigation at City of Hope, a non-profit NCI-designated cancer research and treatment center. In that role, she directed and managed all aspects of the organization&rsquo;s legal claims, disputes, and litigation portfolio, including defending against cases spanning multiple jurisdictions.</p> <p>Stephanie earned her J.D. from the University of California, Los Angeles School of Law and her B.A., <em>cum laude</em>, from Scripps College.</p>{93B2E546-D1FA-4E2B-B826-EB17E9F010FA}https://www.arnoldporter.com/en/perspectives/advisories/2026/06/moving-at-pace-the-cmas-use-of-new-uk-consumer-protection-powers-and-what-to-expect-in-year-2Nicola Chesaiteshttps://www.arnoldporter.com/en/people/c/chesaites-nicolanicola.chesaites@arnoldporter.comLudovica Pizzettihttps://www.arnoldporter.com/en/people/p/pizzetti-ludovicaludovica.pizzetti@arnoldporter.comIn April 2025, the Competition and Markets Authority (CMA) acquired new powers to enforce consumer rights under the Digital Markets, Competition and Consumers Act 2024 (DMCCA). The CMA has deployed these new powers at pace in the first fourteen months. We set out below a short recap of these new powers, a summary of the CMA&rsquo;s enforcement to date, and what to expect in Year 2.Mon, 22 Jun 2026 00:00:00 -0500<p>In April 2025, the Competition and Markets Authority (CMA) acquired new powers to enforce consumer rights under the Digital Markets, Competition and Consumers Act 2024 (DMCCA). The CMA has deployed these new powers at pace in the first fourteen months. It has imposed a &pound;4.2 million fine combined with an order to refund &pound;760,000 to consumers for drip-pricing practices; imposed a &pound;720,000 fine combined with an order to refund &pound;600,000 to consumers for automatic opt-in charges; issued 157 advisory and warning letters; sent 46 information notices (and imposed a substantial fine for non-compliance); opened investigations into 14 businesses, and settled with two others. This sends a clear message to businesses to expect swift and active enforcement of consumer protection in the UK under the new regime. We set out below a short recap of these new powers, a summary of the CMA&rsquo;s enforcement to date, and what to expect in Year 2. </p> <h2>Recap of the CMA&rsquo;s New Consumer Protection Powers</h2> <p>The DMCCA has fundamentally reshaped consumer rights enforcement in the UK. It gave the CMA direct enforcement powers to determine whether consumer rights have been breached and to impose sanctions directly, without first seeking a court determination. The CMA&rsquo;s investigation and fining powers under consumer protection rules now broadly align with those available for competition law enforcement, and include additional enhanced remedial consumer redress tools. These include the power to:</p> <ul> <li>Conduct dawn raids, send formal information requests, and impose penalties of up to 1% of global annual turnover and additional daily penalties for non-compliance with such requests;</li> <li>Impose fines of up to &pound;300,000 or 10% of global annual turnover (whichever is higher) for substantive breaches;&nbsp;</li> <li>Impose &ldquo;Enhanced consumer measures&rdquo; (i.e., conduct requirements, such as mandatory consumer compensation) and &ldquo;online interface notices&rdquo; (i.e., orders to change online interfaces, such as to modify or remove online content);</li> <li>Apply criminal sanctions for certain breaches; and</li> <li>Agree settlements, accept undertakings, and impose fines for any breach of those undertakings.</li> </ul> <p>The unfair commercial practices (UCPs) prohibited under the DMCCA remain substantially unchanged, albeit the DMCCA clarifies the rules, streamlines, and removes certain tests, making it easier to establish a breach. In summary, UCPs are practices that are &ldquo;<em>likely to cause the average consumer to take a transactional decision that the consumer would not have taken otherwise</em>&rdquo; as a result of a misleading action, omission, aggressive practice, or a contravention of the requirements of &ldquo;<em>professional diligence</em>&rdquo;. The DMCCA also specifies 32 commercial practices that are considered unfair in all circumstances and prohibits the omission of material information from an invitation to purchase. Further new rules on subscription traps are expected in Spring 2027. Most of these practices were already unlawful under preexisting law. Still, the DMCCA now expressly prohibits drip pricing (i.e., adding hidden mandatory charges late in the purchasing journey) and fake or misleading reviews. </p> <h2>The CMA&rsquo;s Enforcement Activity to Date</h2> <p>In the last fourteen months, the CMA has conducted a review of 400 businesses across 19 sectors, focusing primarily on three priority areas: drip pricing, fake reviews, and online choice architecture, with the stated aim of targeting the most serious breaches in sectors that matter most to household spending.</p> <p><span style="text-decoration: underline;">Drip pricing</span>. The CMA was most active in relation to drip pricing. In April 2026, it imposed a &pound;4.2 million fine on AA Driving School (Automobile Association Development Limited), accompanied by an order to refund over &pound;760,000 to some 80,000 learner drivers for failing to include a mandatory &pound;3 booking fee in the upfront price. The fine would have been much higher, but AA Driving School received a 40% reduction for early admission and settlement.</p> <p>This fine could well be dwarfed in the near future if the CMA&rsquo;s investigation into Ryanair, opened on June 10, 2026, results in a finding of infringement. In this case, the CMA is investigating Ryanair&rsquo;s &pound;8 additional booking fee for a &ldquo;mandatory family seat&rdquo; to secure an adjacent seat for a child aged 2-11, including whether the fee is presented upfront or is &ldquo;dripped&rdquo; later in the booking process.</p> <p>The CMA has four additional drip pricing investigations ongoing, opened in November 2025, against two secondary ticketing sites, StubHub and Viagogo, as well as Gold&rsquo;s Gym and BSM Driving School. It has issued warning letters to 100 businesses regarding drip pricing, suggesting there may be further enforcement on this issue in the coming months if the CMA&rsquo;s concerns are not addressed. </p> <p><span style="text-decoration: underline;">Fake reviews</span>. Continuing its work in recent years on fake online reviews, in March 2026, the CMA opened formal investigations into five businesses for suspected fake and misleading reviews, namely Autotrader, Feefo, Dignity, Just Eat, and Pasta Evangelists. This followed warning letters sent to 54 businesses in July 2025.</p> <p><span style="text-decoration: underline;">Online choice architecture</span>. On June 18, 2026, the CMA imposed a fine of &pound;720,000 on Marks Electrical plus an order to refund around &pound;600,000 to around 40,000 customers for automatically opting customers in to purchasing additional services when buying its appliances. As in the case concerning AA Driving School (see above), Marks Electrical received a 40% reduction for early admission and settlement. The CMA has two additional investigations ongoing, opened in November 2025, concerning time-limited sales and/or default opt-ins in the household goods sector against Wayfair and Appliances Direct. </p> <p><span style="text-decoration: underline;">Other conduct</span>. Beyond these three areas, the CMA launched an investigation into early cancellation fees in March 2026. Separately, in February 2026, the CMA issued a fine of &pound;473,000 for failing to comply with an information notice, which demonstrates that even procedural non-compliance carries its own significant risk.</p> <h2>What to Expect in Year 2</h2> <p>The CMA has been explicit about its Year 2 priorities, which are: <strong>price transparency</strong>, <strong>fake reviews</strong>, <strong>consumer contract terms</strong> (including subscription contracts where new rules come into force in Spring 2027), and <strong>AI and its deployment by businesses</strong>. For in-house teams, the immediate practical steps are to ensure pricing is transparent and all-inclusive from the outset, review policies around online reviews for authenticity and accuracy, audit consumer-facing contracts (including exit and cancellation fee provisions) against the CMA&rsquo;s most recent guidance, and consider how AI-generated or AI-assisted customer interactions are disclosed and governed.</p> <p>Businesses that received warning letters last year in key areas of consumer spending &ndash; including operators in train and bus travel, cinemas, parcel delivery, and food and drink delivery &ndash; could face a formal investigation if they do not bring their practices into line.</p> <p>Where the application of the law is genuinely uncertain, businesses should engage early and proactively with the CMA, which has clearly signaled its openness to dialogue with stakeholders and its willingness to provide bespoke and practical guidance.</p> <h2>An attractive enforcement tool for the CMA</h2> <p>The new consumer protection regime equips the CMA with investigative and fining powers akin to those under the competition regime, but enforcing it will potentially be far easier and quicker. This is because establishing a UCP does not require complex and detailed economic analyses of market definition and dominance, as is required in competition investigations, which often run for years. By comparison, the CMA&rsquo;s first consumer protection settlement case and fine against AA Driving School was concluded in less than five months. That pace, combined with fines of up to 10% of global turnover, makes consumer protection enforcement an efficient and high-impact &mdash;&nbsp;and therefore attractive &mdash;&nbsp;tool for the CMA to deploy. Given the parallels between the investigative and enforcement powers under the consumer protection and competition regimes, a question that arises is whether the CMA may be able to address certain types of conduct through the consumer protection regime rather than pursuing conduct as an abuse of dominance. Enforcement of this type would be limited to consumer-facing conduct; there, examples of the kind of conduct that theoretically might be capable of being pursued under both regimes could be excessive pricing, as well as tying and bundling. However, it seems such conduct would need to be combined with opacity/ a lack of transparency or aggressive practices (such as exploitation of vulnerable consumers) in order to constitute a UCP. Also, the practice would need to be &ldquo;likely to cause the average consumer to take a transactional decision that the consumer would not have taken otherwise&rdquo;. Given these difficulties, the CMA may not be tempted to seek to deploy its new powers in this way, at least in the short term. In the meantime, given the pace set in the first fourteen months, the number of current ongoing investigations, and an ambitious set of priorities for Year 2 (including in relation to the deployment of AI by businesses), the next ten months will be interesting.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{F722A330-FC82-4A67-9087-D02F2401050F}https://www.arnoldporter.com/en/perspectives/news/2026/06/pinnacle-women-insights-names-kathleen-harris-among-top-10-admired-women-leadersArnold &amp; Porter partner Kathleen Harris, who heads the firm's London office, was named one of <em>Pinnacle Women Insights</em>&rsquo; "Top 10 Admired Women Leaders," recognizing accomplished women leaders driving meaningful impact within their organizations and industries.Thu, 18 Jun 2026 00:00:00 -0500<p>Arnold &amp; Porter partner Kathleen Harris, who heads the firm's London office, was named one of <em>Pinnacle Women Insights</em>&rsquo; "Top 10 Admired Women Leaders," recognizing accomplished women leaders driving meaningful impact within their organizations and industries.</p> <p>In its <a rel="noopener noreferrer" href="https://pinnaclewomeninsights.com/Kathleen-Harris-Partner-of-Arnold-&amp;-Porter-Kaye-Scholer-Certified-as-Top-10-Admired-Women-Leaders-of-2026-by-PWI.php" target="_blank">profile</a>, <em>Pinnacle Women Insights</em> highlights Kathleen&rsquo;s leadership of the London office, her internationally recognized legal practice, and her commitment to expanding access to the legal profession. The publication describes Kathleen&rsquo;s career as one &ldquo;built on purpose, principle, and the power of opportunity&rdquo; and recognizes her efforts to broaden pathways into the legal profession through various initiatives. <em>Pinnacle Women Insights</em> further notes that Kathleen&rsquo;s journey demonstrates &ldquo;what can happen when talent meets purpose, when leadership is rooted in values, and when opportunity is treated not as a privilege but as a responsibility.&rdquo;</p>{447789AE-1CA1-4D4D-8554-962F9E92844D}https://www.arnoldporter.com/en/perspectives/advisories/2026/06/china-strengthens-management-of-medical-representativesJohn Tanhttps://www.arnoldporter.com/en/people/t/tan-johnjohn.tan@cn.arnoldporter.comSiyi Guhttps://www.arnoldporter.com/en/people/g/gu-siyisiyi.gu@cn.arnoldporter.comChina&rsquo;s 2026 Management Measures for Medical Representatives significantly expand pharmaceutical compliance obligations by imposing stricter oversight on medical representatives, Marketing Authorization Holders, and third-party sales organizations. The regulations strengthen anti-bribery and anti-fraud enforcement, require enhanced monitoring of promotional activities and healthcare institution interactions, and introduce new compliance, registration, and due diligence requirements that pharmaceutical companies operating in China should address before the rules take effect on August 1, 2026.Thu, 18 Jun 2026 00:00:00 -0500<p> </p> <p>On May 7, 2026, China&rsquo;s National Medical Products Administration (NMPA), in conjunction with six other government agencies,[[N:These government agencies include: National Health Commission, National Healthcare Security Administration, Ministry of Public Security, State Administration for Market Regulation, National Administration of Traditional Chinese Medicine, and National Disease Control and Prevention Administration.]] issued the <a rel="noopener noreferrer" href="https://www.nmpa.gov.cn/xxgk/ggtg/ypggtg/ypqtggtg/20260507180422166.html" target="_blank">Management Measures for Medical Representatives</a> (Management Measures, <span>医</span><span>药代表管理办法</span>), which will take effect on August 1, 2026.</p> <p>The Management Measures represent a long anticipated and significant development in China&rsquo;s regulatory framework for the pharmaceutical industry. The Management Measures are the final version of the Draft Management Measures for Medical Representatives, which were published for public comment in November 2024 (2024 Draft, <span>医</span><span>药代表管理办法</span>(<span>征求意</span><span>见稿</span>)),[[N:For further analysis of the Draft Management Measures, see <a href="https://www.arnoldporter.com/en/perspectives/advisories/2024/12/the-new-draft-administrative-measures-for-management" target="_self">China&rsquo;s New Draft Administrative Measures for Management of Medical Representatives</a>.]] and replace the December 2020 Management Measures for Record-Filing of Medical Representatives (Trial Version) (2020 Trial Measures, <span>医</span><span>药代表备案管理办法</span>(<span>试行</span>)).</p> <p>In this Advisory, we summarize key changes and their implications for industry. Pharmaceutical companies operating in China should assess their compliance posture, particularly their policies for and monitoring of their sales force. While the Management Measures do not apply to the medical device and medtech sector, the NMPA has announced that similar regulations for the medical device and medtech sector are forthcoming, so companies in the sector should view the Management Measures as a preview of coming regulations.</p> <h2>Background</h2> <p>The Management Measures generally maintain the overall structure of the 2024 Draft, with some important adjustments and a few clarifications, and represent a significant change over the 2020 Trial Measures, which are still currently in effect.</p> <p>While the 2020 Trial Measures primarily focus on the record-filing process for medical representatives and their promotional activities, the Management Measures are more comprehensive, covering not only the conduct of medical representatives, but also that of Marketing Authorization Holders (MAHs), healthcare institutions, and healthcare providers. This is consistent with Chinese regulators&rsquo; continued emphasis on end-to-end compliance management.</p> <h2>MAHs: Increased Supervisory Liabilities</h2> <p>One significant change from the 2024 Draft is restoring requirements found in the 2020 Trial Measures relating to third-party professional services organizations engaged by MAHs to promote the sale of drugs, such as contract sales organizations (CSOs). This change shows that regulators recognize the practice of using CSOs,[[N:Article 3 of the 2026 Management Measures defines medical representatives as &#91p&#93ractitioners who are employed or authorized by MAHs to deliver, communicate, and provide feedback on drug information to healthcare institutions and their staff, and engage in drug academic promotion activities.&rdquo; ]] which was previously a grey area. When engaging CSOs, MAHs are required to assess the CSOs&rsquo; capabilities, include compliance requirements and liabilities for breach of contract in their service contracts, and execute contracts for the management of medical representatives. (Article 8.2) The Management Measures also formally impose compliance requirements on professional services organizations, which largely parallel the obligations imposed on MAHs, e.g., not to retain medical representatives with a record of commercial bribery. (Article 12)</p> <p>Another notable revision in the Management Measures is a prohibition on MAHs and professional services organizations &ldquo;condoning&rdquo; (<span>纵容</span>) medical representatives&rsquo; illegal activities. (Article 11) The 2024 Draft prohibited MAHs from directing illegal activities. This expansion from regulation of MAHs&rsquo; affirmative misconduct to include tolerance of employees&rsquo; misconduct may be intended to restrict MAH&rsquo;s ability to evade corporate liability.</p> <p>Other new obligations placed on MAHs in the 2024 Draft are generally preserved in the Management Measures. For instance, MAHs are prohibited from employing or authorizing medical representatives who are unqualified or have records of commercial bribery (Article 11), and are required to ensure that their medical representatives sign compliance commitment letters. (Article 15)</p> <h2>Medical Representatives: Requirements and Prohibitions</h2> <p>The Management Measures generally maintain the restrictions on medical representatives&rsquo; conduct introduced in the 2024 Draft. For example, medical representatives are prohibited from providing kickbacks or other improper benefits to healthcare professionals (HCPs) and/or persons with close relationships to HCPs, such as family members or close friends. In addition, the Management Measures adjust the requirements for what information should be submitted on the Record-Filing Platform (the Platform), and lowered the requirements for medical representatives&rsquo; academic qualifications and professional experience.</p> <p>The Management Measures contain stronger protections for patient privacy. While the 2024 Draft prohibited medical representatives&rsquo; unauthorized disclosure of patient information, the Management Measures further prohibit medical representatives&rsquo; illegally collecting, using, and/or disseminating patient information. This is an important expansion, and aligns with recent enforcement actions targeting medical representatives for improperly obtaining patients&rsquo; personal information.</p> <p>The Management Measures provide that medical representatives are required to register at healthcare institutions when first conducting promotional activities, a change from the 2020 Trial Measures, which only required medical representatives to obtain healthcare institutions&rsquo; consent to promotional activities. Given this change from a consent-based framework for promotional activities to a registration-based framework, companies may wish to review their internal approval processes for promotional activities taking place at healthcare institutions, including HCP visits and departmental meetings.</p> <h2>Enhanced Enforcement Measures</h2> <p>The Management Measures maintains the 2024 Draft provisions explicitly setting forth mechanisms for cooperation among various government authorities in monitoring and investigating misconduct by MAHs, medical representatives, HCPs, and healthcare institutions. In addition to delineating the scope of responsibilities for each government authority, such as the social credit evaluations conducted by healthcare security administrations,[[N:For further analysis of the Credit Evaluation System, see <a href="https://www.arnoldporter.com/en/perspectives/advisories/2025/06/china-compliance-update-life-sciences-summer-2025" target="_self">China Compliance Update: Life Sciences &mdash; Summer 2025</a>.]] the Management Measures require collaboration and information sharing among authorities, which further aligns with recent enforcement trends.[[N:For key observations from enforcement actions in 2025, see <a href="https://www.arnoldporter.com/en/perspectives/advisories/2026/03/china-life-sciences-2025-year-in-review" target="_self">China Life Sciences: 2025 Year in Review</a>.]]</p> <p>The Management Measures retain the 2024 Draft&rsquo;s emphasis on commercial bribery as a primary target for regulatory enforcement, and add &ldquo;fraud&rdquo; as another area of focus.[[N:For example, Article 12 prohibits professional organizations from instructing or condoning medical representatives to engage in &ldquo;illegal and criminal activities such as commercial bribery and fraud.&rdquo;]] This addition of &ldquo;fraud&rdquo; likely refers to fraud against China&rsquo;s state-run medical insurance program, which has been the subject of increasingly intense enforcement actions by Chinese regulators.[[N:For further analysis of enforcement actions targeting medical insurance fraud in 2026, see <a href="https://www.arnoldporter.com/en/perspectives/advisories/2026/04/china-compliance-update-life-sciences-spring-2026" target="_self">China Compliance Update: Life Sciences &mdash; Spring 2026</a>.]] If regulators find evidence of commercial bribery, fraud, or other illegal activity, they may not only publish their findings of misconduct on the Platform, but also require the MAH to publicly disclose the misconduct on the MAH&rsquo;s own website. MAHs may also face additional penalties, including public disclosure of findings of noncompliant conduct, targeting for enhanced regulatory scrutiny, and debarment from public procurement programs.</p> <h2>Takeaways</h2> <p>Chinese regulators remain focused on anti-corruption in the life sciences industry. The Management Measures provide a number of new regulatory requirements which pharmaceutical companies may wish to consider when reviewing their compliance programs:</p> <ul> <li><strong>Promotional Activities</strong>. Review internal controls around the approval and monitoring of promotional activities, particularly for activities taking place at healthcare institutions.</li> <li><strong>Hiring and Employment</strong>. Ensure that hiring processes for medical representatives comply with the Management Measures, including background checks for evidence of commercial bribery and having medical representatives sign compliance commitment letters.</li> <li><strong>Third Parties</strong>: Implement appropriate due diligence, contracting, and monitoring processes for third-party promotional services organizations.</li> <li><strong>Training and Documentation</strong>: Conduct regular compliance training for medical representatives and maintain appropriate books and records systems.</li> </ul> <p>For questions on this or any other subject, please reach out to the authors or any of their colleagues in Arnold &amp; Porter&rsquo;s <a href="https://www.arnoldporter.com/en/services/capabilities/practices/life-sciences-and-healthcare-regulatory" target="_self">Life Sciences</a> or <a href="https://www.arnoldporter.com/en/services/capabilities/practices/white-collar-defense-and-investigations" target="_self">White Collar Defense &amp; Investigations</a> practice group.</p> <p>* Zhewen Zhang contributed to this Advisory.</p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{C6149045-93AE-4D50-B4B8-60BAB396AE76}https://www.arnoldporter.com/en/perspectives/events/2026/06/good-technology-gone-bad-when-innovation-meets-liabilityLori B. Leskinhttps://www.arnoldporter.com/en/people/l/leskin-lori-blori.leskin@arnoldporter.comE. Dean H. Porterhttps://www.arnoldporter.com/en/people/p/porter-deandean.porter@arnoldporter.comPlease join Arnold &amp; Porter&rsquo;s Technology &amp; Media industry group for a webinar exploring the legal, regulatory, and reputational risks that can emerge when innovative consumer technologies are allegedly misusedWed, 17 Jun 2026 00:00:00 -0500<p>Please join Arnold &amp; Porter&rsquo;s Technology &amp; Media industry group for a webinar exploring the legal, regulatory, and reputational risks that can emerge when innovative consumer technologies are allegedly misused in ways their creators never intended.</p> <p>Our panel will examine:</p> <ul> <li>How product features involving recording, tracking, connected devices, and data sharing can become the subject of litigation and public scrutiny when they intersect with privacy, safety, and law enforcement concerns</li> <li>Emerging theories of liability and key risk areas in product design and deployment</li> <li>Practical steps companies can take to strengthen governance, anticipate misuse scenarios, and better position themselves before disputes arise</li> </ul>{C6B4218F-1877-49C2-83F2-65994226B134}https://www.arnoldporter.com/en/perspectives/advisories/2026/06/the-eu-anti-corruption-directive-raises-compliance-standard-for-businessesKathleen Harrishttps://www.arnoldporter.com/en/people/h/harris-kathleenkathleen.harris@arnoldporter.comAlexander Roussanovhttps://www.arnoldporter.com/en/people/r/roussanov-alexanderalexander.roussanov@arnoldporter.comSean Curranhttps://www.arnoldporter.com/en/people/c/curran-seansean.curran@arnoldporter.comMelissa Dameshttps://www.arnoldporter.com/en/people/d/dames-melissamelissa.dames@arnoldporter.comThe EU Anti-Corruption Directive, which entered into force on May 31, 2026, creates a harmonized anti-corruption framework across the EU by standardizing corruption offenses, expanding corporate liability, and introducing significant penalties, including fines tied to a company&rsquo;s global turnover. The directive applies broadly to businesses with EU operations, including non-EU companies, and introduces a new &ldquo;trading in influence&rdquo; offense that heightens compliance risks for organizations engaging lobbyists, consultants, or intermediaries. It also incentivizes robust compliance programs, voluntary disclosure, and cooperation with authorities, while signaling a more coordinated and aggressive enforcement environment across EU Member States.&nbsp;Wed, 17 Jun 2026 00:00:00 -0500<p> <p>On May 31, 2026, <a rel="noopener noreferrer" href="https://eur-lex.europa.eu/eli/dir/2026/1021/oj/eng" target="_blank">Directive (EU) 2026/1021</a> of the European Parliament and of the Council of April 29, 2026 on combatting corruption (the EU Anti-Corruption Directive) entered into force, marking a significant step towards establishing a stronger EU legislative framework for combatting corruption effectively, with more harmonized national enforcement standards throughout the EU Member States.</p> <p>The EU Anti-Corruption Directive harmonizes corruption offenses across the EU, introduces a new standalone &ldquo;trading in influence&rdquo; offense, and raises the stakes for individuals and businesses alike through turnover-based penalties. Genuine compliance programs, cooperation with authorities, and voluntary disclosure are all expressly recognized as mitigating factors, giving businesses a real incentive to reduce their risk exposure before Member States pass their implementing legislation.</p> <h2>Background</h2> <p>Corruption remains a significant and costly challenge across the EU. Between 2016 and 2021, the total cost of corruption risk in public procurement across all sectors in the EU was estimated at &euro;29.6 billion. More recently, in 2025, 69% of Europeans considered corruption to be widespread in their country, with 66% believing that high-level corruption cases are not pursued sufficiently.</p> <p>In view of this, the Commission presented an Anti-Corruption Package in May 2023, including a proposal to combat corruption by criminal law. Negotiations were difficult, and a provisional agreement between the Commission, the Parliament, and the Council was not reached until December 2025. The European Parliament formally adopted the text in March 2026 by 581 votes to 21, with the Council giving its final approval on April 21, 2026.</p> <p>The EU Anti-Corruption Directive forms a core part of that broader package, introducing harmonized criminal offenses, minimum standards for penalties, and a turnover-based sanctioning regime applicable across the public and private sectors. It consolidates and substantially replaces the existing EU anti-corruption framework, including the 1997 Convention on corruption involving EU officials and Council Framework Decision 2003/568/JHA on combating corruption in the private sector, which had proved too high-level and directional to keep pace with increasingly sophisticated cross-border corruption, resulting in significant divergence in enforcement standards across Member States. The EU Anti-Corruption Directive seeks to address this by establishing a single, harmonized framework of criminal offenses and penalties applicable across both the public and private sectors. It will be complemented by a forthcoming EU Anti-Corruption Strategy expected later in 2026, which is anticipated to set out the broader political and institutional framework within which the EU Anti-Corruption Directive will operate.</p> <h2>Scope</h2> <p>The EU Anti-Corruption Directive applies to any business in the public or private sector with operations, subsidiaries, or business activities within the EU, bringing companies that are headquartered in the UK and the U.S. within scope. The definition of a &ldquo;public official&rdquo; is broad, extending beyond formal officeholders to include any person exercising a public service function, including employees of privately owned companies that perform public services.</p> <h2>Transposition</h2> <p>Member States will be expected to transpose the new provisions into national law within 24 months, although obligations relating to risk assessment and national anti-corruption strategies will have a longer transposition period of up to 36 months. National implementing legislation will be carefully watched, as part of the purpose of this Directive is to harmonize the EU-wide approach to corruption.</p> <p>Member States will retain their own investigatory bodies and competent authorities operating within their national legal systems. Each Member State also retains autonomy over how it structures its investigatory and prosecutorial functions. However, the EU Anti-Corruption Directive emphasizes cross-border cooperation designed to address one of the most significant weaknesses in the previous framework.</p> <h2>What Are the Key Offenses?</h2> <p>The EU Anti-Corruption Directive standardizes a set of criminal offenses across all Member States, applicable when the conduct was intentional and committed either directly or indirectly.</p> <p>The key offenses are:</p> <ul> <li>Bribery in the public sector (Article 3)<br /> Active bribery, comprising a promise, offer, or giving of an undue advantage to a public official, either directly or indirectly through an intermediary, is criminalized. Passive bribery, comprising a request or receipt of an undue advantage by a public official, either directly or indirectly through an intermediary, is also criminalized. The definition of &ldquo;undue advantage&rdquo; is broad and can be tangible or intangible, pecuniary or non-pecuniary, although gifts of low value are excluded.</li> <li>Bribery in the private sector (Article 4)<br /> Active and passive bribery in the course of business is criminalized where a person directing or working for a private sector entity acts (or refrains from acting) in breach of their duties, in exchange for an undue advantage. A &ldquo;breach of duty&rdquo; covers, at a minimum, any behavior constituting a breach of a statutory duty, professional regulations, or instructions applicable within the entity.</li> <li>Trading in influence (Article 6)<br /> Perhaps the most significant new offense for businesses, and one with no direct equivalent in many existing national regimes, it criminalizes the promising, offering, or giving of an undue advantage, including through an intermediary, to exert improper influence over a public official, regardless of whether the influence was real, actually exerted, or effective in changing behavior. The request or receipt is also criminalized. While legitimate interest representation that does not result in an &ldquo;undue advantage&rdquo; is carved out, Member States will need to carefully consider the line between lawful lobbying and criminal conduct. Businesses that engage lobbyists, government affairs consultants, or former public officials to interact with regulators or public authorities on their behalf face a new compliance risk under this offense.</li> </ul> <p>Other criminal offenses include misappropriation (Article 5), unlawful exercise of public functions (Article 7), obstruction of justice (Article 8), enrichment from corruption offenses (Article 9), and incitement, aiding and abetting, and attempt (Article 11).</p> <h2>Corporate Liability</h2> <p>The EU Anti-Corruption Directive imposes criminal liability on a legal person where an offense is committed for its benefit by a person in a &ldquo;leading position&rdquo; within the organization (Article 13). A &ldquo;leading person&rdquo; is broadly defined to include one or more of the following:</p> <ol style="margin-left: 40px;"> <li>A power of representation of the legal person</li> <li>An authority to take decisions on behalf of the legal person</li> <li>An authority to exercise control within the legal person</li> </ol> <p>While in practice this is likely to include directors, senior executives and other individuals at management level, the precise boundaries are likely to be the subject of further debate, particularly as the Member States transpose the EU Anti-Corruption Directive into national law.</p> <p>Importantly, Article 13(2) imposes liability on a legal person where the lack of supervision or control made possible the criminal offense, where that offense was committed for the entity&rsquo;s benefit. Liability incurred from failure to supervise has significant implications for how businesses structure their compliance frameworks, particularly in relation to junior employees, agents, and others acting on the company&rsquo;s behalf.</p> <p>Corporate liability under the EU Anti-Corruption Directive does not replace individual liability, and businesses should be prepared for the possibility of simultaneous investigations and prosecutions on both the corporate and individual levels.</p> <h2>Penalties and Sentencing</h2> <p>The EU Anti-Corruption Directive sets minimum standards for both custodial sentences and financial penalties, and introduces a turnover-based sanctioning regime for legal persons that raises the stakes for corporate non-compliance across the EU.</p> <p>Member States must ensure that the offenses under the EU Anti-Corruption Directive are punishable by maximum terms of imprisonment of at least five years for public sector bribery and at least three years for private sector bribery (Article 12). These are minimum terms, and Member States may provide for higher maximum sentences under their national implementing legislation.</p> <p>For legal persons, the EU Anti-Corruption Directive introduces two alternative bases for financial penalties. Member States must provide either for turnover-based fines of at least 5% of worldwide annual turnover for the core bribery offenses and misappropriation (and at least 3% for certain other offenses, including trading in influence, obstruction, and enrichment), or for fixed fines of at least &euro;40 million and &euro;24 million respectively (Article 14). Turnover-based fines can be significant for large multinationals, with 5% of worldwide annual turnover exceeding any fixed penalty and creating a clear incentive for businesses to revisit how they address regulatory risk.</p> <p>Beyond financial penalties and imprisonment, the EU Anti-Corruption Directive provides for a range of additional sanctions and measures that can be imposed on individuals and legal persons, including disqualification from carrying on business activities, exclusion from access to public funding and tender procedures, and publication of the judicial decision. For businesses that depend on public sector contracts or EU funding, the reputational and commercial consequences should not be underestimated.</p> <h2>Aggravating and Mitigating Circumstances</h2> <p>The EU Anti-Corruption Directive specifies a number of aggravating and mitigating factors. For example, Member States may treat repeat offending, the obtaining of substantial benefit or causing of substantial damage, and the offender being an AML-obliged entity or a person in a leading position at one, as aggravating factors (Article 15). Voluntary disclosure and remedial action taken upon discovery, cooperation with competent authorities, and the legal person having implemented effective internal controls, ethics awareness, and compliance programs are all mitigating factors (Article 16). Compliance programs must be genuine and effective to qualify as a mitigating factor; they risk being treated as an aggravating one.</p> <h2>Practical Implications for Businesses</h2> <p>Businesses with EU operations should treat the EU Anti-Corruption Directive as a prompt to audit and strengthen their existing anti-bribery and corruption frameworks to ensure they are capable of withstanding scrutiny. Compliance programs must be genuinely effective since their presence is a formal mitigating factor at sentencing, whereas superficial or &ldquo;window dressing&rdquo; programs risk being treated as aggravating ones.</p> <p>Particular attention should be given to the trading-in-influence offense, which is novel in many jurisdictions and has direct implications for how businesses select, due diligence, and instruct lobbyists, government affairs consultants, and other intermediaries who interact with public officials on their behalf.</p> <p>Businesses should also map which individuals across their management structures and group entities fall within the &ldquo;leading position&rdquo; corporate liability trigger, and ensure that compliance oversight and escalation mechanisms operate effectively across all entities. Whistleblowing channels should be reviewed to ensure corruption offenses are explicitly covered.</p> <p>The consequences of a successful prosecution are substantial and sit within a broader trend of increasingly aggressive enforcement across the EU. Regulators not only have greater ability and clearer mandates to pursue cases that would have previously fallen into jurisdictional gaps, but a combination of expanded offenses, wide jurisdictional reach, and penalties means businesses cannot treat anti-corruption compliance as a formality.</p> <p>* Sophia Kim contributed to this Advisory. Sophia is employed as a&nbsp;Trainee Solicitor in Arnold &amp; Porter&rsquo;s London office.</p> </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{6D3F0641-C6D5-4882-9131-57D64FF6841A}https://www.arnoldporter.com/en/perspectives/advisories/2026/06/supreme-court-shuts-the-door-on-ica-rescission-claimsBou Leehttps://www.arnoldporter.com/en/people/l/lee-boubou.lee@arnoldporter.comArthur Lukhttps://www.arnoldporter.com/en/people/l/luk-arthurArthur.Luk@arnoldporter.comAaron F. Minerhttps://www.arnoldporter.com/en/people/m/miner-aaron-faaron.miner@arnoldporter.comIn <em data-start="3" data-end="62">FS Credit Opportunities Corp. v. Saba Capital Master Fund</em>, the U.S. Supreme Court held that Section 47(b) of the Investment Company Act does not create an implied private right of action for investors seeking rescission of contracts that allegedly violate the Act. The decision reinforces that enforcement of most ICA provisions remains primarily with the SEC and limits shareholders&rsquo; ability to challenge fund governance practices through federal litigation.Wed, 17 Jun 2026 00:00:00 -0500<p> <p>On June 11, 2025, the U.S. Supreme Court decided <em>FS Credit Opportunities Corp., et al. v. Saba Capital Master Fund, Ltd., et al.</em> (24-345), <a rel="noopener noreferrer" href="https://www.supremecourt.gov/opinions/25pdf/24-345_i42k.pdf" target="_blank">holding</a> that Section 47(b) of the Investment Company Act of 1940 (ICA) does not create an implied right of action for rescission.</p> <p>Typically enforced by the Securities and Exchange Commission (SEC), the ICA governs mutual funds and other registered investment companies. With two exceptions, no section of the ICA expressly authorizes a private right of action. The question presented was whether private parties have an implied right of action under Section 47(b) to sue for rescission of contracts that allegedly violate the ICA. In line with its recent reluctance to find implied private rights of action, a six-justice majority of the Court held the answer is &ldquo;no.&rdquo;</p> <h2>Background</h2> <p>In 2023, activist investor Saba Capital (Saba) sued several closed-end mutual funds (the Funds) that had adopted &ldquo;control share provisions&rdquo; under Maryland law that diluted investors&rsquo; voting shares. Saba alleged that depriving shareholders of their voting rights violated Section 18(i) of the ICA.[[N:Section 18(i) requires that &ldquo;every share of stock hereafter issued by a registered management company &hellip; shall be a voting stock and have equal voting rights with every other outstanding voting stock.&rdquo; 15 U.S.C. &sect; 80a-18(i).]] Arguing that the control share provisions also affect the Funds&rsquo; and shareholders&rsquo; contractual relationship, Saba sought rescission pursuant to Section 47(b) of the ICA, which provides that contracts that violate the ICA are &ldquo;unenforceable by either party.&rdquo; 15 U.S.C. &sect; 80a-46(b)(1). Saba argued Section 47(b) also provides a right of action via the provision that &ldquo;a court may not deny rescission at the instance of any party&rdquo; absent certain findings.</p> <p>Saba&rsquo;s arguments relied heavily on the 1979 Supreme Court decision in <em>Transamerica Mortgage Advisors, Inc. v. Lewis</em>, 444 U.S. 11 (1979) (<em>TAMA</em>), which held there was an implied private right of action for rescission in a parallel provision of a related statute, the Investment Advisers Act of 1940 (IAA). Section 215(b) of the IAA provides that contracts that violate the statute &ldquo;shall be void,&rdquo; thereby authorizing rescission of such contracts. 15 U.S. Code &sect; 80b-15(b). Saba pointed to both statutes&rsquo; legislative history, as they were enacted together. After <em>TAMA</em>, Congress amended 47(b) of the ICA to include that a court &ldquo;may not deny rescission at the instance of <em>any party</em>&rdquo; absent certain findings.[[N:A court may not deny rescission unless it finds that doing so would be more equitable and would not be inconsistent with the ICA&rsquo;s purpose. 15 U.S. Code &sect; 80a-46(b)(2).]] 15 U.S. Code &sect; 80a-46(b)(2) (emphasis added). Saba argued this language provides a limited private right to seek rescission of a contract that violates the ICA.[[N:Brief for Respondents, <em>FS Credit Opportunities Corp., et al, Petitioners v. Saba Capital Master Fund, Ltd., et al.</em> (2025) (No. 24-345), at 1-3.]]</p> <h2>Opinion</h2> <p>Writing for the majority, Justice Amy Coney Barrett held that Section 47(b)&rsquo;s phrase &ldquo;rescission at the instance of any party&rdquo; does not imply that private parties may sue. (Op. 5). Chief Justice John Roberts and Justices Clarence Thomas, Samuel Alito, Neil Gorsuch, and Brett Kavanaugh joined the majority.</p> <p>The majority explained that Section 47(b)&rsquo;s provision is a &ldquo;mandate directed to &hellip; courts&rdquo; and does not confer a right to individuals. Id. (citation omitted). &ldquo;Section 47(b)&rsquo;s wording thus presupposes that parties are already before the court and directs the court&rsquo;s use of its remedial authority.&rdquo; Id. The majority emphasized that under contract law, rescission is a remedy rather than a cause of action. Citing the statutory structure, the majority also noted that the SEC is the ICA&rsquo;s main enforcer and that the act already expressly authorizes two private rights of action for other sections of the ICA: (1) for shareholders to sue investment advisors for certain breaches of fiduciary duty (15 U.S. Code &sect; 80a-35(b)), and (2) for securities holders to sue certain insider defendants to recover short-swing profits (15 U.S. Code &sect; 80a-29(h)). Thus, &ldquo;nothing in the text or structure of the ICA indicates that Congress authorized private parties to enforce virtually every provision in the statute.&rdquo; (Op. 8).</p> <p>The majority also rejected Saba&rsquo;s reliance on <em>TAMA</em> and statutory history, finding that Congress&rsquo; amendments distinguish Section 47(b) from Section 215 of the IAA. The most significant change according to the majority was Congress&rsquo; deletion of the phrase &ldquo;shall be void&rdquo; from Section 47(b), which is the language on which <em>TAMA</em> turns and which remains in Section 215. Accordingly, the majority found that Congress&rsquo; amendments &ldquo;were a renovation, not a new coat of paint.&rdquo; (Op. 10).</p> <p>Justice Ketanji Brown Jackson, joined by Justice Sonia Sotomayor in full and Justice Elena Kagan in part, dissented. In her view, Congress&rsquo; post-<em>TAMA</em> amendments to Section 47(b) ratified <em>TAMA</em>&rsquo;s holding, rather than changed it. (Dissent 7-10). She pointed to House and Senate Committee Reports for the post-<em>TAMA</em> amendments that explicitly stated private rights of action should be implied under the amended statute &ldquo;to the same extent&rdquo; as before. (Dissent 12).</p> <p>Justice Kagan wrote separately, explaining that she believed that Section 47(b)&rsquo;s text is sufficiently clear such that there is no need to rely on legislative history to interpret the statute.</p> <h2>Impact on Investors</h2> <ul> <li><strong>Even more state court actions?</strong> The decision is a setback for activist investors like Saba that are now foreclosed from suing for contract rescission under the ICA. Prior to this decision, activist investors had some success bringing ICA rescission cases before the Second Circuit. The decision may shift litigation to state court, as activists may now look even more to state law claims like breach of fiduciary duty claims or proxy fights to challenge governance structures. </li> <li><strong>Funds are better insulated</strong>. Relatedly, while the decision did not address the legality of the Funds&rsquo; actions, it nevertheless gives funds one less federal challenge to worry about when opting into state control share statutes to resist activist pressure. Without the threat of an ICA lawsuit, some closed-end funds may feel more confident using state incorporation law as a shield against activist investors like Saba. More broadly speaking, there is one less mechanism available to shareholders to hold closed-end funds, especially underperforming ones, accountable. </li> <li><strong>Less enforcement of the ICA?</strong> In her dissent, Justice Jackson cited House and Senate Committee Reports that stated private actions could fill the enforcement gap created by the SEC&rsquo;s relatively small staff. (Dissent 12). The Court&rsquo;s ruling limits shareholders&rsquo; avenues for challenging alleged violations of the ICA and places the onus back on the SEC, which has recently brought significantly fewer enforcement actions generally.</li> </ul> <p>If you have questions about this Advisory, please contact your Arnold &amp; Porter relationship attorney or the authors of this Advisory.</p> </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>{043BAB09-5D90-4026-85B9-67B384011497}https://www.arnoldporter.com/en/perspectives/events/2026/06/part-i-biotech-deals-creating-optimal-licensing-and-partnering-arrangementsDaniel A. Kracovhttps://www.arnoldporter.com/en/people/k/kracov-daniel-adaniel.kracov@arnoldporter.comAbigail Struthershttps://www.arnoldporter.com/en/people/s/struthers-abigailabigail.struthers@arnoldporter.comMatthew Tabashttps://www.arnoldporter.com/en/people/t/tabas-matthewmatthew.tabas@arnoldporter.comEva Temkinhttps://www.arnoldporter.com/en/people/t/temkin-evaeva.temkin@arnoldporter.comKristin M. Hickshttps://www.arnoldporter.com/en/people/h/hicks-kristin-mkristin.hicks@arnoldporter.comAlana Reidhttps://www.arnoldporter.com/en/people/r/reid-alana-jalana.reid@arnoldporter.comMichael Penneyhttps://www.arnoldporter.com/en/people/p/penney-michaelmichael.penney@arnoldporter.comHemmie Changhttps://www.arnoldporter.com/en/people/c/chang-hemmiehemmie.chang@arnoldporter.comAlyssa S. Hoganhttps://www.arnoldporter.com/en/people/h/hogan-alyssa-salyssa.hogan@arnoldporter.comEric Rothmanhttps://www.arnoldporter.com/en/people/r/rothman-ericeric.rothman@arnoldporter.comBetty Yanhttps://www.arnoldporter.com/en/people/y/yan-bettybetty.yan@arnoldporter.comPlease join Arnold &amp; Porter for Part I of our in-person series designed for legal and business leaders at biotechnology companies focused on optimizing their licensing and partnering.Tue, 16 Jun 2026 00:00:00 -0500<p>Please join Arnold &amp; Porter for Part I of our in-person series designed for legal and business leaders at biotechnology companies focused on optimizing their licensing and partnering.</p> <p>This program will take the form of a presentation and boardroom-style discussion focused on the strategic question of whether to license an asset. We will explore key considerations that inform licensing and partnering strategies, including:</p> <ul> <li>Out-licensing versus strategic alternatives</li> <li>Transaction structuring priorities, including diligence focus</li> <li>Intellectual property and exclusivity protections</li> <li>Regulatory pathways considerations</li> <li>Antitrust and Hart-Scott-Rodino Act compliance issues</li> <li>Tariff and pricing dynamics (including IRA and MFN considerations)</li> </ul> <p>We look forward to a thoughtful and engaging discussion!</p> <h3>Program Alert</h3> <p>We hope you&rsquo;ll save <strong>Wednesday, September 16</strong> for the second program in this series where we&rsquo;ll explore practical approaches to navigating and resolving complex disputes that may arise when a licensing partnership begins to unravel.</p>{8B8ADB1F-48C6-498D-93E2-86AB7975A3FF}https://www.acc.com/education-events/2026/its-doge-new-world-navigating-environmental-enforcement-landscape-webinarbenjamin.piper@arnoldporter.comTue, 16 Jun 2026 00:00:00 -0500{EB3C4439-5A77-4322-ABA4-51073631CDB4}https://www.arnoldporter.com/en/perspectives/advisories/2026/06/national-security-controls-and-the-life-sciences-sectorDaniel A. Kracovhttps://www.arnoldporter.com/en/people/k/kracov-daniel-adaniel.kracov@arnoldporter.comMahnu V. Davarhttps://www.arnoldporter.com/en/people/d/davar-mahnu-vmahnu.davar@arnoldporter.comBobby McMillinhttps://www.arnoldporter.com/en/people/m/mcmillin-bobbybobby.mcmillin@arnoldporter.comJohn Tanhttps://www.arnoldporter.com/en/people/t/tan-johnjohn.tan@cn.arnoldporter.comBetty Yanhttps://www.arnoldporter.com/en/people/y/yan-bettybetty.yan@arnoldporter.comMatthew Tabashttps://www.arnoldporter.com/en/people/t/tabas-matthewmatthew.tabas@arnoldporter.comRonald D. Leehttps://www.arnoldporter.com/en/people/l/lee-ronald-dRonald.Lee@arnoldporter.comKatherine Rohdehttps://www.arnoldporter.com/en/people/r/rohde-katherinekate.rohde@arnoldporter.comFollowing the U.S. Department of Defense&rsquo;s addition of WuXi AppTec and other biotech companies to its list of Chinese military companies, these entities may soon face restrictions under the BIOSECURE Act, while lawmakers are also pushing to subject biotechnology investments and licensing deals with Chinese firms to outbound investment controls under the COINS Act and proposed BINSA legislation. Companies in the pharmaceutical and biotechnology sectors should closely monitor these developments, assess existing partnerships, and prepare for potential compliance and supply chain impacts.Tue, 16 Jun 2026 00:00:00 -0500<p> <h2>Executive Summary</h2> <p>The life sciences sector continues to be a growing area of interest for national security controls, as U.S. pharmaceutical companies have increasingly partnered with Chinese firms for development, manufacturing, and licensing arrangements. On June 8, 2026, the U.S. Department of Defense (DoD) added WuXi AppTec &mdash; a prominent Chinese drug development and manufacturing services provider &mdash; to its list of &ldquo;Chinese military companies&rdquo; operating in the United States. The listing sets the stage for WuXi AppTec and other Chinese entities to be designated as a &ldquo;biotechnology company of concern&rdquo; under the BIOSECURE Act, which may restrict pharmaceutical companies&rsquo; ability to use their biotechnology equipment and services in connection with certain federal contracts. WuXi AppTec has already filed a legal challenge to its designation as a Chinese military company, and other companies may follow suit. Elsewhere, a growing number of lawmakers are calling for biotechnology transactions and licensing arrangements with Chinese firms to be subject to outbound investment screening requirements, as codified under the Comprehensive Outbound Investment National Security (COINS) Act. As the regulatory landscape continues to shift, industry participants should carefully evaluate the impact on their current and future arrangements with Chinese life sciences companies.</p> <h2>BIOSECURE Act and the 1260H List</h2> <p>On June 8, 2026, the DoD issued an <a rel="noopener noreferrer" href="https://nam11.safelinks.protection.outlook.com/?url=https%3A%2F%2Fmedia.defense.gov%2F2026%2FJun%2F08%2F2003945537%2F-1%2F-1%2F1%2FENTITIES-IDENTIFIED-AS-CHINESE-MILITARY-COMPANIES-OPERATING-IN-THE-UNITED-STATES-IN-ACCORDANCE-WITH-SECTION-1260H.PDF&amp;data=05%7C02%7CTheresa.Denson%40arnoldporter.com%7Ca2b2625e540b4fefd15e08decb1c5311%7Cd22d141fae37447facfa2e1d0e5b4969%7C0%7C0%7C639171519685511520%7CUnknown%7CTWFpbGZsb3d8eyJFbXB0eU1hcGkiOnRydWUsIlYiOiIwLjAuMDAwMCIsIlAiOiJXaW4zMiIsIkFOIjoiTWFpbCIsIldUIjoyfQ%3D%3D%7C0%7C%7C%7C&amp;sdata=hpz3NVp9Dw8Id2yF6ipvb5urwM75HBXVmxQVWmSBA6A%3D&amp;reserved=0" target="_blank">updated version</a> of its list of Chinese military companies operating in the United States, known as the &ldquo;1260H List.&rdquo; Notably, the new list includes WuXi AppTec Co., Ltd., which DoD described as &ldquo;indirectly owned by&rdquo; the State-owned Assets Supervision and Administration Commission (SASAC) and &ldquo;indirectly affiliated with&rdquo; the People&rsquo;s Liberation Army (PLA) and the State Administration of Science, Technology and Industry for National Defense (SASTIND). The list also includes BGI Group (with seven listed affiliates), MGI Tech Co., Ltd., Novogene Company Limited, and Origincell Technology Co., Ltd., as well as companies involved in digital health and related sectors such as Alibaba Group Holding Limited and Tencent Holdings Limited.</p> <p>The 1260H listing is significant because it lays the groundwork for WuXi AppTec and other listed entities to be designated as potential &ldquo;biotechnology companies of concern&rdquo; (BCCs) under the BIOSECURE Act, enacted as part of the FY26 National Defense Authorization Act (NDAA). As explained in our <a href="https://www.arnoldporter.com/en/perspectives/advisories/2025/12/the-biosecure-act-becomes-law-in-the-united-states" target="_self">December 2025 Advisory</a>, the BIOSECURE Act prohibits federal agencies from entering into, extending, or renewing any &ldquo;contract&rdquo; with an entity that uses &ldquo;biotechnology equipment or services&rdquo; from a BCC in performance of that contract. It also prohibits using federal loan or grant funds to procure or use biotechnology equipment or services from a BCC. Accordingly, pharmaceutical manufacturers may soon face restrictions on the use of certain equipment and services from WuXi AppTec or other listed entities in connection with their federal contracts and grants. </p> <p>A company may qualify as a BCC if it is (1) included on the 1260H List and (2) &ldquo;involved in the manufacturing, distribution, provision, or procurement&rdquo; of a biotechnology equipment or service. Whether a company satisfies the second prong is determined through an administrative process involving the Office of Management and Budget (OMB), DoD, and other executive agencies.</p> <p>Now that WuXi AppTec and others have been identified in the 1260H List, the U.S. government will determine if the listed companies have the required nexus to biotechnology equipment or services. If so, these companies will be included in the initial list of BCCs published by OMB, which must be issued by December 18, 2026. To the extent the U.S. government determines any subsidiary of a listed company also qualifies as a BCC, those subsidiaries would likewise be identified in the initial BCC list. The U.S. government may designate a company that is not on the 1260H List as a BCC, if it determines the company is controlled by the government of a foreign adversary and poses a national security risk.</p> <p>Importantly, the BIOSECURE Act&rsquo;s prohibitions do not take immediate effect upon an entity&rsquo;s designation as a BCC. Companies that have existing arrangements with BCCs can also take advantage of the statute&rsquo;s five-year grandfathering period for biotechnology equipment or services provided under contracts executed before the statute&rsquo;s prohibitions take effect.</p> <p> <p>As previously noted, WuXi AppTec has filed a legal challenge to its addition to the 1260H List, and other newly listed companies may follow suit. In 2021, consumer goods manufacturer Xiaomi Corp successfully litigated the removal of its designation as a &ldquo;Communist Chinese military company&rdquo; under Executive Order 13595. Litigation and lobbying efforts by these companies may further complicate or extend the timeline.</p> </p> <p>Pharmaceutical companies with potentially implicated arrangements can take time now to evaluate the extent to which those arrangements involve &ldquo;biotechnology equipment or services&rdquo; used &ldquo;in performance of&rdquo; their federal contracts. Companies may also wish to review existing contracts to ensure they are positioned to take advantage of the BIOSECURE Act&rsquo;s grandfathering provision, or consider negotiating a transition plan away from designated entities to avoid the application of the BIOSECURE Act.</p> <p> <p>Companies should also consider reviewing their relationships with Chinese companies added to the 1260H list holistically, whether or not the Chinese companies are ultimately designated as BCCs, to consider potential impact on cooperation in digital health, enterprise technology, and other sectors.</p> </p> <h2>Outbound Investment Rules and Biotechnology</h2> <p>Cross-border licensing deals between Chinese biotechnology companies and global pharmaceutical firms have <a rel="noopener noreferrer" href="https://www.reuters.com/sustainability/climate-energy/china-biotech-licensing-boom-hit-record-2026-pipeline-swells-2026-02-13/" target="_blank">surged</a> in recent years, reaching a record $137 billion in total deal value in 2025 &mdash; a nearly tenfold increase from $13.9 billion in 2021. As U.S. pharmaceutical companies have increasingly pursued these development and licensing arrangements with Chinese firms, a growing number of lawmakers have called for the transactions to be subject to outbound investment controls. Much of the discussion has focused on the COINS Act, also enacted as part of the FY26 NDAA alongside the BIOSECURE Act. </p> <p>The COINS Act codifies and broadens the existing Outbound Investment Security Program established under 31 C.F.R. Part 850. Generally, the COINS Act authorizes the Secretary of the U.S. Department of the Treasury (Treasury Department) to prohibit or impose notification requirements for certain outbound &ldquo;covered national security transactions&rdquo; involving a &ldquo;prohibited technology&rdquo; or &ldquo;notifiable technology.&rdquo; The COINS Act defines &ldquo;covered national security transaction&rdquo; to include certain types of transactions with a connection to a &ldquo;country of concern,&rdquo; including China. </p> <p>The existing Outbound Investment Security Program remains in effect until the Treasury Department issues implementing regulations.</p> <h3>COINS Act Implementation</h3> <p>Biotechnology is not currently identified as a &ldquo;prohibited technology&rdquo; or &ldquo;notifiable technology&rdquo; under the COINS Act. However, the COINS Act authorizes the Treasury Department Secretary to add through regulations additional technology categories that &ldquo;enable the military, intelligence, surveillance, or cyber-enabled capabilities of a country of concern.&rdquo; Some lawmakers are now urging the Treasury Department to use this regulatory authority to address biotechnology transactions.</p> <p>In February 2026, several Republican lawmakers <a rel="noopener noreferrer" href="https://chinaselectcommittee.house.gov/sites/evo-subsites/selectcommitteeontheccp.house.gov/files/evo-media-document/coins-implementation-letter-02.26.2026.pdf" target="_blank">sent a letter</a> to Treasury Department Secretary Scott Bessent, urging the administration to expand the Outbound Investment Security Program to include biotechnology-related investments. The letter contends that continued U.S. investment in the Chinese biotechnology industry could leave the United States &ldquo;dangerously dependent&rdquo; on China for advanced medicines and threaten American leadership in biotechnology.</p> <p>Representative John Moolenaar (R-MI), Chair of the Select Committee on China, <a rel="noopener noreferrer" href="https://files.constantcontact.com/f0eecb46901/6d9fa229-f025-471e-92d5-e1aa8bb62d4b.pdf" target="_blank">penned a separate letter</a> to Secretary Bessent on May 21, 2026, again advocating that biotechnology transactions be subject to outbound investment screening. Moolenaar states that the rise of out-licensing and co-development arrangements between pharmaceutical companies and Chinese biotechnology firms risks &ldquo;accelerating China&rsquo;s dominance of the pharmaceutical innovation supply chain.&rdquo; Moolenaar contends that the BIOSECURE Act &ldquo;recognized that biotechnology is both a national security asset and a strategic vulnerability.&rdquo; Failing to apply outbound investment rules to biotechnology transactions, Moolenaar argues, could create &ldquo;long-term strategic dependency risks&rdquo; for the United States, analogous to rare earth elements and parts of the semiconductor supply chain. Moolenaar requests that the Treasury Department give particular consideration to out-licensing arrangements involving pharmaceutical intellectual property, drug discovery platforms, clinical research and development capabilities, and biologics manufacturing and commercialization know-how.</p> <h3>Legislative Proposals</h3> <p>On June 2, 2026, Representatives Moolenaar and Debbie Dingell (D-MI) introduced the Biotech Investment National Security Act (BINSA). If enacted, BINSA would officially add &ldquo;biotechnology&rdquo; to the list of prohibited and notifiable technologies subject to outbound investment controls under the COINS Act. The bill adopts a broad definition of &ldquo;biotechnology,&rdquo; reaching the research, development, manufacturing, or commercialization of all &ldquo;drugs&rdquo; as defined in the Federal Food, Drug, and Cosmetic Act and all &ldquo;biological products&rdquo; as defined in the Public Health Service Act. It also covers &ldquo;therapeutic compounds, including drug discovery platforms, clinical research and development capabilities, biologics manufacturing, and intellectual property and know-how relating to therapeutic compounds.&rdquo; In practical terms, this definition could sweep in nearly the full spectrum of pharmaceutical activity involving Chinese firms, provided the transaction qualifies as a &ldquo;covered national security transaction.&rdquo;</p> <p>Importantly, BINSA would also add licensing arrangements to the list of covered transactions subject to outbound investment controls. Accordingly, if BINSA is enacted, pharmaceutical companies entering into licensing arrangements with Chinese firms could face notification requirements or outright prohibitions under the COINS Act. </p> <p>The most likely legislative vehicle for the BINSA&rsquo;s potential enactment this year would be the FY27 NDAA. The FY26 NDAA included both BIOSECURE and the COINS Act. Notably, BIOSECURE received significant floor and committee consideration, over the course of nearly two years, before it was signed into law in December 2025.</p> <p>Although it is unclear whether BINSA has a path to enactment, it signifies a continued bipartisan focus on the national security implications of commercial relationships between U.S. pharmaceutical companies and Chinese firms. Even absent legislation, the Treasury Department Secretary retains authority under the COINS Act to expand outbound investment controls to biotechnology through rulemaking &mdash; a possibility that industry participants should monitor closely.</p> <h2>Looking Ahead</h2> <p>The developments discussed in this Advisory reflect a broader trend toward extending national security controls to the life sciences sector. Industry participants should monitor developments, prepare contingency plans, and negotiate appropriate contractual protections for life sciences controls, including in the following:</p> <ul> <li><strong>1260H List Designations</strong>. Companies newly added to the 1260H list may contest their designation through lawsuits and negotiations with DoD. Even if companies on this list are not designated as BCCs, industry participants may wish to review their cooperation with these companies to assess potential impact on digital health, enterprise technology, and other initiatives.</li> <li><strong>BIOSECURE Act implementation</strong>. The release of OMB&rsquo;s initial list of BCCs, due by December 18, 2026, will be a key milestone. Industry participants should also watch for required guidance and revisions to the Federal Acquisition Regulation that will shape how the statute&rsquo;s prohibitions are applied in practice.</li> <li><strong>COINS Act implementing regulations</strong>. As the Treasury Department develops implementing regulations for the COINS Act, there is potential for biotechnology to be added as a prohibited or notifiable technology category &mdash; even absent new legislation.</li> <li><strong>BINSA and related legislation</strong>. Although BINSA&rsquo;s path to enactment is uncertain, it and similar legislative proposals signal sustained congressional interest in subjecting development and licensing arrangements with Chinese firms to outbound investment controls.</li> <li><strong>Congressional Consideration of FY27 NDAA</strong>. While not technically in the Armed Services Committee&rsquo;s jurisdiction, industry participants should monitor whether policies like BINSA, and similar legislative proposals, are discussed or offered as amendments.</li> <li><strong>Potential Countermeasures</strong>. As the U.S. tightens its national security controls on biotechnology, China may pursue reciprocal measures that limit U.S. pharmaceutical companies&rsquo; access to Chinese biotechnology assets. For example, Chinese regulators could add certain biotechnologies to its Catalogue of Technologies Prohibited and Restricted from Export, a regulatory tool governing technology transfer under the country&rsquo;s export control laws. Chinese regulators may also consider subjecting biotech transactions to China&rsquo;s own recently announced outbound investment regulations, which will take effect on July 1, 2026.</li> </ul> <p>We stand ready to advise our clients on the evolving national security landscape for the life sciences sector. If you have any questions about the content discussed in this Advisory or would like more information, please reach out to one of the authors or your existing Arnold &amp; Porter contact.</p> </p> <p><span style="font-size: 13px;">&copy; Arnold &amp; Porter Kaye Scholer LLP 2026 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.</span></p>