In JanCo FS 2, LLC v. ISS Facility Services, Inc., the Delaware Superior Court’s Complex Commercial Litigation Division issued a post-trial opinion interpreting the interaction between a materiality scrape provision and a contractually defined “Material Adverse Effect” qualifier in the context of an absence of changes representation. The decision provides important and unusually explicit guidance for deal attorneys on how materiality scrapes actually operate when applied to Material Adverse Effect-qualified representations, and it should prompt practitioners on both sides of a transaction to pressure-test their drafting.

Background

ISS Facility Services, Inc. (ISS) sold its cleaning business to JanCo FS 2, LLC (JanCo), a subsidiary of the Argenbright Group, for $80 million under an asset purchase agreement (APA). The APA contained a standard suite of seller representations, including an absence of changes representation in Section 4.10, which provided that since June 30, 2021 (several months prior to the closing date), ISS had not suffered any change or event that had, or could reasonably be expected to have, a “Material Adverse Effect” on the business.

The APA defined term “Material Adverse Effect” was itself circular, using “material adverse effect” (lowercase, undefined) within the definition. This is not an unusual drafting convention; many acquisition agreements define the capitalized Material Adverse Effect term by reference to a lowercase “material adverse effect,” intending the lowercase usage to carry its ordinary meaning under Delaware law.

The APA also contained a materiality scrape in Section 7.5(f), which provided that for indemnification purposes, “all qualifications and limitations set forth in the Parties’ representations and warranties as to ‘materiality,’ ‘Material Adverse Effect,’ ‘Material Adverse Change’ and words of similar import shall be disregarded” in determining whether a breach of the representations and warranties had occurred.

After closing, JanCo alleged ISS breached the absence of changes representation based on a significant increase in temporary labor costs and operational disruptions caused by a botched rollout of ISS’s new HR system during the pre-closing interim period. The key interpretive question was how the materiality scrape interacted with the defined Material Adverse Effect term in the absence of changes representation, and whether the scrape reduced the buyer’s burden to showing merely any adverse effect, rather than a material one.

The Court’s Interpretation: Order of Operations

The court sided with JanCo and adopted what amounts to a two-step “order of operations” for applying the materiality scrape to representations that reference a defined Material Adverse Effect term.

Step one: Insert the definition. Because “Material Adverse Effect” is a defined term, functioning as “a convenient substitute for the definition,” the court first replaced the capitalized term in Section 4.10 with its full contractual definition. After this substitution, the absence of changes representation effectively provided that ISS had not suffered any change that had a “material adverse effect” (lowercase) on the business.

Step two: Apply the scrape. The court then applied the materiality scrape, which removed “materiality” and “words of similar import” from the representations. With “material” scraped from the now-expanded text, the representation was reduced to a warranty that ISS had not suffered any change that had an adverse effect on the business, a dramatically lower threshold.

The court rejected ISS’s competing interpretation, which would have struck the defined term “Material Adverse Effect” from the representation before inserting its definition, an approach that left a blank in the operative text and rendered the provision nonsensical. The court found this was simply the wrong order of operations: “Inserting the definition before employing the Materiality Scrape is the proper order of operations, as it prevents [the absence of changes provisions] from becoming illegible.”

Notably, the court observed that neither party’s briefing got the analysis exactly right. JanCo reached the correct result but “skip[ped] the key step of implementing the full definition of Material Adverse Effect before scraping ‘material.'” ISS’s approach produced illegible text. The fact that the parties themselves struggled to explain the mechanics of their own materiality scrape, a provision that appears in nearly every acquisition agreement, highlights the latent ambiguity these clauses carry.

Structural Reinforcement: Baskets, Caps, and the Risk Allocation Framework

The court did not interpret the materiality scrape in isolation. It bolstered its broad reading by examining the APA’s indemnification architecture, treating the basket, cap, and damage exclusions as evidence of the parties’ intended risk allocation.

The APA contained a $500,000 basket and a cap of 12.5% of the purchase price, along with exclusions for categories of damages, including lost profits and diminution in value. The court reasoned that the existence of a relatively low basket was inconsistent with a requirement to prove a material adverse effect, which Delaware courts have generally associated with declines in the range of 40% or more, because a Material Adverse Effect would produce damages far exceeding not only the basket but the cap. In the court’s view, the basket and cap structure “indicates the Parties did not intend for a material adverse effect to be proven before indemnification is available.”

The court further rejected ISS’s argument that the broad reading rendered the absence of changes representation overbroad, noting that the damage exclusions and indemnification limits reflected the parties’ negotiated risk allocation and provided meaningful constraint on JanCo’s recovery even under the lowered breach threshold. In the court’s words, it would “not punish JanCo for succeeding at the bargaining table.”

Proving Breach but Recovering Nothing

Despite finding a breach, the court denied JanCo any recovery. JanCo’s fraud and willful misconduct claims failed because JanCo knew about the staffing and operational issues before closing, defeating justifiable reliance, and because the court held ISS could not knowingly breach a provision whose scope neither party understood. With fraud and willful misconduct defeated, JanCo’s recovery was limited by the APA’s indemnification framework, and JanCo’s damages theory, an all-or-nothing diminution-in-value figure that was not apportioned among its various breach claims, was both untethered to the single breach it proved and independently barred by the APA’s exclusion of lost profits and diminution in value from indemnifiable losses.

Takeaways for Deal Attorneys

This decision should change how practitioners approach materiality scrapes in several concrete ways:

• Model the scrape before you sign. The court’s order of operations, insert the Material Adverse Effect definition first, then apply the scrape, means that any materiality qualifier embedded within a circular Material Adverse Effect definition will be stripped out for indemnification purposes. Practitioners should walk through this two-step exercise on every representation in the agreement that references the defined Material Adverse Effect term. The results may be far broader, or far narrower, than either side appreciates at the drafting table.
• Circular Material Adverse Effect definitions create a trap for sellers. When the defined Material Adverse Effect term contains a lowercase “material adverse effect” within its definition, the materiality scrape reaches through the defined term and removes the materiality qualifier at the definitional level. Sellers who agree to a materiality scrape without appreciating this dynamic may be making representations that are, for indemnification purposes, unqualified. Sellers seeking to preserve the Material Adverse Effect threshold should consider drafting the Material Adverse Effect definition to avoid using “material” or similar language internally, or should negotiate specific carve-outs from the scrape for the absence of changes representation.
• Buyers can use this architecture intentionally. For buyers, this decision validates the strategy of pairing a broad materiality scrape with a circular Material Adverse Effect definition to create a low-threshold absence of changes warranty for indemnification purposes while preserving the Material Adverse Effect standard for other purposes (such as closing conditions). Buyers should ensure their materiality scrape language expressly covers “Material Adverse Effect,” “materiality,” and “words of similar import” to capture both the defined term and any residual materiality language that survives the definitional insertion.
• The indemnification structure must be internally consistent. The court used the basket, cap, and damage exclusions as interpretive guideposts, reasoning that a low basket was inconsistent with a requirement to prove a Material Adverse Effect. Deal attorneys should ensure the indemnification architecture tells a coherent story. A seller who agrees to a low basket while resisting a materiality scrape may find that the basket itself is used as evidence that the parties intended a low breach threshold. Conversely, a buyer who negotiates a materiality scrape but agrees to narrow damage categories may win on the breach but have no avenue to recover, as JanCo discovered.
• Consider scrape-specific exclusions for particular representations. Rather than applying the materiality scrape uniformly across all representations, parties may benefit from negotiating tailored treatment. For example, a seller might agree to a full scrape on the financial statements representation but seek to exclude the absence of changes representation from the scrape or vice versa. This decision makes clear that a blanket scrape, applied to representations with embedded Material Adverse Effect qualifiers, can produce results that neither party anticipated.
• Damages planning starts at the drafting stage. While the materiality scrape analysis is the headline, this decision is also a cautionary tale about the gap between proving a breach and recovering for it. Buyers should ensure that the types of damages they are most likely to suffer in a downside scenario, including diminution in value and lost profits, are not excluded from the indemnification framework, and should develop breach-specific damages theories rather than relying on an omnibus approach. A materiality scrape that lowers the breach threshold is only valuable if the buyer can recover meaningful damages once a breach is established.

This article was originally published in CROP Innovation & Business on February 17, 2026.

Continuing Lessons from Corteva v. Inari for Agricultural IP Strategy in 2026

As the Corteva Agriscience LLC v. Inari Agriculture Inc. seed development litigation in the U.S. continues to make its way through discovery, it may reshape how the agricultural industry approaches seed depository and trait development practices, IP portfolio structure, and enforcement strategy.

The case is still on-going, so its ultimate outcome is still unknown. However, the latest developments in the case offer germplasm owners and trait developers some valuable lessons and new legal considerations for agricultural IP strategy in 2026.

Case Background

In 2023, Corteva filed suit, alleging that Inari infringed on U.S. Patent No. 8,575,434 and its U.S. Department of Agriculture plant variety protection (PVP) rights for Corteva maize seeds. Inari allegedly obtained Corteva’s seeds from a seed depository, conducted testing, and exported them to Inari’s operations in Belgium, before genetically modifying the seeds and seeking IP protections for the modified traits.

Corteva claims that Inari’s use of depository material was not permitted follow-on innovation under its utility patent, but rather a misappropriation and commercial use of Corteva’s proprietary technology — infringing on both its PVP rights and patent. Inari contends that seed deposits are required to be made available to the public for certain authorized activities, that Inari did not conduct any prohibited commercialization activities in the U.S., and Corteva’s overlapping PVP rights cannot be used to invalidate permissible uses for seeds covered by a utility patent.   

2025 Developments in the Case

After the court rejected Inari’s initial motion to dismiss in 2024, the case proceeded to discovery and Corteva then filed a second amended complaint, supplementing its PVP certificate infringement allegations and asserting additional utility patents against Inari.

Inari counterclaimed, alleging that Corteva was misusing its web of overlapping PVP certificates and utility patents to restrain trade and restrict trait developers from permitted uses of depository seeds (under various antitrust theories, including sham litigation and patent misuse, and unclean hands). Inari also sought declaratory judgments of unenforceability / invalidity regarding multiple unasserted Corteva utility patents, including U.S. Patent No. 8,901,378 and 231 other patents corresponding to Corteva’s PVP‑protected varieties.

On reviewing Corteva’s motion to dismiss those counterclaims, the court ruled as follows:

The court held that it has subject matter jurisdiction over Inari’s declaratory judgment counterclaims targeting the unasserted U.S. Patent No. 8,901,378 utility patent, as well as 231 other unasserted Corteva utility patents corresponding to Corteva’s PVP‑protected varieties, because Corteva is already suing over the same seeds and technology in the lawsuit.

The court rejected Inari’s sham litigation claims against Corteva, because Inari did not provide any legal authority to establish that sham litigation is a basis to invalidate the enforceability of a patent or PVP certificate.

The court rejected Inari’s patent-misuse theory, which alleged Corteva was using biological deposits to obtain utility patents and then restricting permissible downstream use of deposits with overlapping IP rights (e.g. PVPs), because Inari’s position was not supported by legal authority.

The court allowed Inari’s unclean hands theory to proceed, declining to strike it at the pleading stage. The court noted that unclean hands is a broad equitable defense, and that it would be premature to foreclose the defense before discovery.

Implications for IP Strategy in 2026

For germplasm owners and trait developers, this case offers three valuable lessons going into 2026:

1. Rethink portfolio structure and enforcement as an integrated system. This litigation is a reminder that in today’s seed and trait disputes, litigation often implicates an entire IP portfolio or suite of related IP assets. The court, so far, has acknowledged the overlapping rights created by patents, PVPs, and other plant IP protections. While overlapping IP rights can offer germplasm owners greater IP coverage and protection, it can also be a potential double-edged sword – asserting one IP right can invite attempts to bring IP rights not yet asserted into the dispute. It can also lead to allegations of anti-competitive conduct. 

2. Aggressive, overlapping enforcement is not automatically “misuse,” but it is not risk‑free. The court’s rejection of Inari’s patent‑misuse theory may be reassuring to germplasm owners, since it suggests that owning and enforcing a dense network of patents and PVPs does not automatically implicate the patent-misuse doctrine. However, aggressive enforcement can potentially fuel unclean hands arguments, if internal practices, deposit behavior, and market and litigation conduct appear anticompetitive.   

3. Treat depository obligations as a strategic variable. Trait developers increasingly rely on depository material as a starting point for development. For their part, germplasm owners rely on deposits to satisfy enablement requirements and support the enforceability of utility patents. Given this, germplasm owners should take all reasonable measures in depository agreements to limit uses to only those required by law. Trait developers, on the other hand, need to carefully analyze the governing law and depository agreements before they embark on development efforts that could expose them to legal claims.   

Conclusion

The Corteva vs. Inari case continues to offer interesting lessons for how courts are addressing the intersection of depository practice, overlapping IP portfolios, and aggressive enforcement in the agriculture technology sector. Those who adjust their strategies now, will be better positioned as the legal landscape continues to evolve.

On February 12, 2026, the Treasury Department (Treasury) and the Internal Revenue Service (IRS) issued Notice 2026-15 (the Notice). The Notice describes certain rules to be included in forthcoming proposed regulations addressing the prohibited foreign entity (PFE) material assistance requirements for purposes of Sections 48E (CEITC), 45Y (CEPTC), and 45X (advanced manufacturing credit), and safe harbor tables for determining the applicable material assistance cost ratio (MACR). The PFE regime (also known as FEOC, or foreign entity of concern) was enacted by the One Big Beautiful Bill Act (OBBBA).

Executive Summary

The Notice provides both general rules and safe harbors for determining the MACR, which must exceed the Applicable Threshold Percentage (defined below). Because compliance with the general rules could be difficult, and because the safe harbors are available for the most common projects (including solar, wind, and battery projects), we expect the safe harbors to be widely used.

The Notice outlines a five-step process for determining the MACR for the CEITC and CEPTC (i.e., Clean Electricity MACR) for a qualified facility or energy storage technology (EST).

1. Identify the types of manufactured products (MPs) and manufactured product components (MPCs) included in the qualified facility or EST. Under the Identification Safe Harbor described below, tables from the existing domestic content notices provide an exclusive and exhaustive list of MPs and MPCs.
2. For each MP and MPC included in the qualified facility or EST, track whether the MP or MPC was produced by a prohibited foreign entity (PFE Produced). Under the Certification Safe Harbor described below, taxpayers may rely on certifications from suppliers to determine whether an MP or MPC was PFE Produced.
3. Determine the direct costs attributable to the identified MPs and MPCs. Under the Cost Percentage Safe Harbor described below, taxpayers may determine direct costs using the Assigned Cost Percentages of the MPs and MPCs set forth in the domestic content notices in lieu of actual direct costs.
4. Determine the direct costs attributable to the identified MPs and MPCs that are PFE Produced. For this purpose, the Assigned Cost Percentage listed for producing the MP (Production) is part of the PFE Produced amount if the applicable MP is PFE Produced.
5. Calculate the Clean Electricity MACR by subtracting the amount in step 4 from the amount in step 3 and dividing the result by the amount in step 3. If the Clean Electricity MACR is less than the Applicable Threshold Percentage, then the qualified facility or EST includes material assistance from a PFE.

A similar process applies for determining the MACR for the advanced manufacturing credit.

Unfortunately, the Notice does not address the other two FEOC rules — i.e., the rules for determining whether a taxpayer is a PFE and whether contracts applicable to a qualified facility or EST confer effective control.

Definitions

The Notice and Section 7701 rely on several key definitions that are fundamental to understanding the material assistance restrictions.

• 2023-2025 Safe Harbor Tables: The tables provided in Notice 2025-08 (with respect to Solar PV facilities, land-based wind facilities, and ESTs), Notice 2024-41 (with respect to hydropower facilities and pumped hydropower storage facilities), and Notice 2023-38 (with respect to offshore wind facilities).
• Applicable Threshold Percentage: This is the minimum percentage of non-PFE Produced property that can be in a qualified facility or EST. For a qualified facility that begins construction in 2026, the threshold percentage is 40%. For an EST that begins construction in 2026, the threshold is 55%. The threshold percentage increases by 5% each year for both categories through 2029. For purposes of the advanced manufacturing credit, the threshold percentage for eligible components varies by the type of equipment. The threshold percentage is 50% for solar energy components sold in 2026 and increases by 10% each year through 2029, then to 85% after 2029. The threshold percentage for wind energy components sold in 2026 is 85%, increasing to 90% for components sold in 2027. The threshold percentage for battery components sold in 2026 is 60% and increases by 5% each year through 2029.
• Clean Electricity MACR: The percentage equal to (i) the total direct costs to the taxpayer attributable to all manufactured products (including components) incorporated into the qualified facility or EST other than the total direct costs attributable to all such products that are mined, produced, or manufactured by a PFE, divided by (ii) the total direct costs to the taxpayer attributable to all manufactured products (including components) incorporated into the qualified facility or EST.
• Eligible Component MACR: The percentage equal to (i) the total direct material costs paid or incurred by a taxpayer for the production of such component other than the total direct material costs attributable to all such products that are mined, produced, or manufactured by a PFE, divided by (ii) the total direct material costs paid or incurred by a taxpayer for the production of such component.
• Manufactured Product (MP): An item produced as a result of a manufacturing process, consistent with its usage in Section 45Y(g)(11)(B) and Notice 2023-38, which we discussed in our client alert on Notice 2023-38.
• Manufactured Product Component (MPC): Any article, material, or supply, whether manufactured or unmanufactured, which is directly incorporated into an MP, consistent with its usage in Notice 2023-38, which we discussed in our client alert on Notice 2023-38.
• Material Assistance Cost Ratio (MACR): The Clean Electricity MACR applicable to qualified facilities and EST and Eligible Component MACR applicable to eligible components.
• Prohibited Foreign Entity (PFE): A PFE includes a “specified foreign entity” (SFE), or a “foreign influenced entity” (FIE), in each case, as defined in Section 7701(a)(51). We discussed these terms in our prior client alert on the OBBBA.

OBBBA Material Assistance Requirements

Under the OBBBA, a qualified facility or EST that begins construction after the end of 2025 (or, in the case of the advanced manufacturing credit, in taxable years beginning after July 4, 2025, if an eligible component is used in a product sold before January 1, 2027) is ineligible for the CEITC, CEPTC, and advanced manufacturing credit if it receives material assistance from a PFE, which means that the qualified facility, EST, or eligible component, as applicable, has a MACR that is less than the Applicable Threshold Percentage.

• The material assistance ratio is expected to impact nearly all major suppliers of battery storage systems, solar modules, and wind turbines.

The OBBBA required the Secretary of the Treasury to issue safe harbor tables to simplify this determination no later than December 31, 2026. The Notice provides two interim safe harbors that allow taxpayers to rely on tables in previously issued domestic content guidance: the Identification Safe Harbor and the Cost Percentage Safe Harbor. The Identification Safe Harbor allows taxpayers to rely on such tables to identify the manufactured products and manufactured product components in a qualified facility or EST (or constituent materials, for purposes of the Eligible Component MACR). The Cost Percentage Safe Harbor allows taxpayers to rely on such tables to determine its direct costs (or direct material costs, for purposes of the Eligible Component MACR) by applying specified cost percentages assigned to each manufactured product and manufactured product component.

The Certification Safe Harbor allows taxpayers to rely on a certification for purposes of determining which manufactured products and manufactured product components are produced by a PFE (for the Clean Electricity MACR) or constituent materials are sourced from a PFE (for the Eligible Component MACR) and the portion of a taxpayer’s costs associated with each manufactured product component or constituent material.

Clean Electricity MACR

The calculation of the Clean Electricity MACR is done on a qualified facility-by-qualified facility and EST-by-EST basis as follows:

1. Identify the types of MPs and MPCs included in the qualified facility or EST.
2. For each MP and MPC included in the qualified facility or EST, track the relevant characteristics (including direct costs and whether the MP or MPC was PFE Produced). Under the Certification Safe Harbor described below, taxpayers may rely on certifications from suppliers to determine whether an MP or MPC was PFE Produced.
3. Determine the Direct Costs attributable to the identified MPs and MPCs (Direct Costs).
4. Determine the Direct Costs attributable to the identified MPs and MPCs that are PFE Produced (PFE Direct Costs).
5. Calculate the Clean Electricity MACR by subtracting the amount in step 4 from the amount in step 3 and dividing the result by the amount in step 3. If the Clean Electricity MACR is less than the Applicable Threshold Percentage, then the qualified facility or EST includes material assistance from a PFE.

Identify MPs and MPCs

Taxpayers may use the Identification Safe Harbor to identify MPs and MPCs of a qualified facility or EST. The Identification Safe Harbor allows taxpayers to treat the MPs and MPCs listed in the applicable 2023-2025 Safe Harbor Table for each qualified facility or EST as the exclusive and exhaustive list of MPs and MPCs that are incorporated into the qualified facility or EST. For purposes of the Identification Safe Harbor, each of the following is disregarded: (i) any MP or MPC contained in a qualified facility or EST that is not listed in the applicable 2023-2025 Safe Harbor Table, (ii) any MP or MPC that is listed in the applicable 2023-2025 Safe Harbor Table but is not contained in a qualified facility or EST, (iii) any items classified as “Steel/Iron” in the applicable 2023-2025 Safe Harbor Table, and (iv) when applying the 80/20 rule for a repower, any used property that is part of a qualified facility.

• For a solar PV ground-mount project, the applicable 2023-2025 Safe Harbor Table is section 5.05 of Notice 2025-08, which lists the following MPs: PV module (with cells, frame / backrail, front glass, encapsulant, backsheet / backglass, junction box, edge seals, pottants, bus ribbons, and bypass diodes as MPCs), inverter (with printed circuit board assemblies, electrical parts, thermal management system, and enclosure & skids as MPCs), and PV tracker (with torque tube, structural fasteners, drive system, dampers, actuator, controller, and rails as MPCs).
• For a land-based wind project, the applicable 2023-2025 Safe Harbor Table is section 6.02 of Notice 2025-08, which lists the following MPs: wind turbine (with blades, rotor hub, nacelle, and power converter as MPCs) and wind tower flanges.
• Notably, the 2023-2025 Safe Harbor Tables do not include substation equipment (including generator step-up transformers). Accordingly, the material assistance requirements do not apply to transformers under the safe harbors in the Notice.
• It is worth emphasizing that facilities of a type not listed in the current 2023-2025 Safe Harbor Tables cannot use the Identification Safe Harbor or Cost Percentage Safe Harbor.

Taxpayers that do not use the Identification Safe Harbor must identify each MP and MPC incorporated into the qualified facility or EST based on the actual items used in the construction or installation of the qualified facility or EST. The Notice states: “To identify MPs and MPCs, a taxpayer must identify the types of MPs and MPCs that are incorporated into the qualified facility or EST. A type of MP or MPC refers to a type of product or component that performs a unique, specified function within the qualified facility or EST.”

• Applying the “unique, specified function” test to complex machinery and equipment could be difficult. Similar difficulties affected domestic content before the IRS introduced the safe harbors in Notice 2024-41 and Notice 2025-08. Outside the domestic content safe harbors, the distinction between MPs, MPCs, subcomponents of MPCs, steel or iron components that are structural in function, and non-manufactured products is not always clear (e.g., custom components that require modifications to pre-manufactured subcomponents as part of the assembly process). The uncertainty related to those determinations has made it challenging for taxpayers (and financing parties) to be confident that each item would be correctly classified.

Track MPs and MPCs

Except as described below, each MP and MPC (and its characteristics) must be individually tracked to the specific qualified facility or EST into which it is incorporated. All taxpayers must track whether each MP or MPC was PFE Produced. Taxpayers not using the Cost Percentage Safe Harbor also must track the taxpayer’s direct costs of each MP and MPC.

Taxpayers may use the Certification Safe Harbor to determine which MPs and MPCs incorporated in a qualified facility or EST are PFE Produced. The Certification Safe Harbor permits a taxpayer to rely on written certifications from direct suppliers for purposes of determining whether MPs or MPCs are PFE Produced. Taxpayers that do not use the Certification Safe Harbor must determine whether each MP and MPC is PFE Produced, taking into account ownership, control, and status of the relevant producer under the specified foreign entity and foreign-influenced entity rules, which include complex attribution concepts.

The Notice provides a de minimis assignment rule that is an exception to the requirement to individually track MPs and MPCs of the same type. Under this rule, a taxpayer may choose how to assign MPs or MPCs of the same type to qualified facilities or ESTs if the aggregate direct costs of the MPs and MPCs assigned do not exceed 10% of the total direct costs of the qualified facility or EST.

The Notice also provides another exception from the tracking rule for certain ESTs that (i) are of the same type (based on a shared production line, method and capacity of energy storage, or any other reasonable method) (ii) have a maximum net output of less than 1MW (AC), and (iii) are placed in service during the same taxable year. A taxpayer may track the characteristics of each MP or MPC incorporated in such ESTs by calculating the average of direct costs of the MPs and MPCs of the same type incorporated in the ESTs (for taxpayers not relying on the Cost Percentage Safe Harbor) and calculating a percentage of MPs and MPCs that were mined, manufactured, or produced by a PFE and incorporated in the ESTs placed in service during a specified period. Detailed timing rules apply for this purpose.

Determine Direct Costs and PFE Direct Costs

A taxpayer that uses the Identification Safe Harbor may utilize the Cost Percentage Safe Harbor to determine direct costs and determine PFE Direct Costs, except with respect to qualified facilities that include a new unit or addition of capacity to an existing qualified facility that was placed in service before 2025. Under the Cost Percentage Safe Harbor described below, taxpayers may determine direct costs using the Assigned Cost Percentages of the MPs and MPCs set forth in the domestic content notices in lieu of actual direct costs. The total Direct Costs are equal to the sum of the Assigned Cost Percentages assigned to each MP and MPC in the applicable 2023-2025 Safe Harbor. The PFE Direct Costs are equal to the sum of the Assigned Cost Percentages for the MPCs that are PFE Produced and the Assigned Cost Percentage for Production for MPs that are PFE Produced.

Taxpayers that do not use the Cost Percentage Safe Harbor must determine the actual direct costs attributable to each MP and MPC incorporated in a qualified facility or EST. For MPs acquired by a taxpayer, the direct costs attributable to an MP include acquisition costs with respect to the MP. For MPs produced by a taxpayer, direct costs include the taxpayer’s material costs and direct labor costs, as defined in the Section 263A regulations.

• Unlike the determination of direct costs for purposes of the domestic content enhancement described in Notice 2023-38, the relevant direct costs are the costs to the taxpayer rather than the direct costs to the manufacturer. Accordingly, demonstrating compliance does not require obtaining sensitive cost information from manufacturers directly (though allocations of cost to MPCs may be required), regardless of whether the taxpayer has privity with such party, which was extremely difficult for many developers prior to the issuance of the safe harbors described in Notice 2024-41 and Notice 2025-08.
• Determining direct costs will require either specifying the portion of costs for an MP attributable to each MPC in the relevant supply agreement or relying upon information provided in connection with the Certification Safe Harbor.
• Direct costs, including direct labor costs, of incorporating the MPs into a qualified facility or EST are not counted in the total direct costs attributable to an MP.

For these purposes, if the taxpayer acquires a PFE Produced MP, but some or all of the MPCs included in the MP are not PFE Produced, then the taxpayer excludes from PFE Direct Costs the portion of the MP’s acquisition costs that are attributable to the MPCs that are not PFE Produced. If the taxpayer acquires an MP that is not PFE Produced, but some or all of the MPCs included in the MP are PFE Produced, then the taxpayer includes in PFE Direct Costs the portion of the MP’s acquisition costs that is attributable to the PFE Produced MPCs. If the taxpayer produces an MP that includes any acquired PFE Produced MPCs, then the taxpayer’s PFE Direct Costs include the acquisition costs of the PFE Produced MPCs.

The Notice provides that taxpayers that do not use the Cost Percentage Safe Harbor may use the Certification Safe Harbor to determine direct costs in whole or in part where a supplier has stated the total direct costs paid for the MP or MPC.

Eligible Component MACR

To calculate the Eligible Component MACR for an eligible component, a taxpayer must:

1. Identify the constituent elements, materials, or subcomponents (Constituent Materials) incorporated into the eligible component or consumed in production of the eligible component, the costs of which are considered direct material costs of the eligible component under the Section 263A regulations (e., the cost of those materials that become an integral part of the eligible component).
2. Track the relevant characteristics (direct costs, PFE status) of each Constituent Material used to produce the eligible component.
3. Determine the taxpayer’s direct material costs for each Constituent Material used to produce the eligible component (Direct Material Costs).
4. Determine the Direct Material Costs attributable to each Constituent Material supplied by a PFE (PFE Direct Material Costs).

Identify Constituent Materials

Taxpayers may use the Identification Safe Harbor to identify types of Constituent Material only if the eligible component is specifically listed in the Notice. These listed components include inverters, solar modules, and battery packs/modules. The Identification Safe Harbor provides an exclusive and exhaustive list of Constituent Materials that is consistent with the MPCs listed in the applicable 2023-2025 Safe Harbor Tables. Accordingly, if a taxpayer manufactures one of these specified components and elects to use the Identification Safe Harbor, any materials not listed as an MPC can be disregarded.

Taxpayers that do not use the Identification Safe Harbor must identify each Constituent Material actually incorporated into the eligible component by reference to the component’s production or purchase records.

• Tracking direct costs for all Constituent Materials could prove challenging. We expect manufacturers of inverters, solar modules, and battery packs / modules will rely on the Identification Safe Harbor.

Track Constituent Materials

Except as described below, each Constituent Material must be tracked (and its relevant characteristics) to the eligible component into which it is incorporated.

All taxpayers must track whether each Constituent Material was PFE Produced. Taxpayers not using the Cost Percentage Safe Harbor also must track the taxpayer’s direct material costs attributable to each Constituent Material. Taxpayers may use the Certification Safe Harbor to determine whether Constituent Materials used to produce an eligible component are supplied by a PFE.

Unlike the Clean Electricity MACR, the Notice does not provide any de minimis assignment rule or aggregation rule for tracking Constituent Materials for purposes of the Eligible Component MACR.

Determine Direct Material Costs and PFE Direct Material Costs

Taxpayers that use the Identification Safe Harbor may utilize the Cost Percentage Safe Harbor to determine direct material costs and PFE Direct Material Costs by summing the assigned cost percentages for each Constituent Material listed in the applicable 2023–2025 Safe Harbor Tables, and by summing the assigned cost percentages for only those Constituent Materials that are supplied by a PFE.

Taxpayers that do not use the Cost Percentage Safe Harbor must determine the actual direct material costs attributable to each Constituent Material incorporated into the eligible component. Direct material costs include amounts paid or incurred by the taxpayer for materials that are incorporated into the eligible component or consumed in the production of the eligible component.

Certification Safe Harbor Requirements

The Notice provides that, for a certification to be relied upon under the Certification Safe Harbor, it must be obtained from the direct supplier of the relevant MP, MPC, eligible component, or Constituent Material and must be signed under penalties of perjury. The certification must include the supplier’s employer identification number (or comparable foreign tax identification number) and must state, as applicable, that the relevant MP, MPC, eligible component, or Constituent Material was not mined, produced, or manufactured by a PFE and that the supplier does not know (or have reason to know) that any prior supplier in the chain of production is a PFE, or must state the portion of direct costs or direct material costs attributable to MPs (for the CEITC and CEPTC) or Constituent Material (for the advanced manufacturing credit) that were not supplied by a PFE. The taxpayer must attach the certification to the return or forms for claiming the relevant credit (e.g., Form 3468 for the CEITC and Form 7211 for the CEPTC). A taxpayer may rely on a certification unless it knows or has reason to know that the certification is inaccurate.

• Some suppliers may be reluctant to provide certifications because they could be subject to penalties under Section 6695B of the Code for providing false certifications that result in violations of the material assistance requirements.
• The Notice does not explicitly define the entity that should be treated as the “direct supplier”, which could raise questions depending on the applicable contract structure for the procurement and construction of a project.
• It is not entirely clear what the “chain of production” means in this context. An example in the Notice suggests that, at least for taxpayers applying the Identification Safe Harbor, the chain of production includes only the applicable MP and MPCs.

Qualified Interconnection Property

For purposes of calculating the Clean Electricity MACR for a qualified facility that claims the CEITC, costs attributable to qualified interconnection property (QIP) are excluded from the Clean Electricity MACR. If a taxpayer calculates a separate Clean Electricity MACR for the QIP that does not satisfy the Applicable Threshold Percentage that applies to the qualified facility, or if a taxpayer is unable to calculate a Clean Electricity MACR for the QIP, then the taxpayer is not precluded from claiming the CEITC for the qualified facility. Costs attributable to QIP are eligible for the CEITC if both the Clean Electricity MACR for the QIP and the Clean Electricity MACR for the applicable qualified facility satisfy the Applicable Threshold Percentage.

• The Notice clarifies that the Identification Safe Harbor and the Cost Percentage Safe Harbor are not available for QIP. As a result, it could be difficult to satisfy the material assistance requirements for QIP, particularly if the applicable utility constructs the interconnection facilities.

Reliance

Taxpayers may rely on the rules described in the Notice for (i) any qualified facility or EST the construction of which begins before the date that is 60 days after the date of publication of the forthcoming proposed regulations in the Federal Register and (ii) eligible components sold in taxable years beginning on or before the date that is 60 days after the date of publication of the forthcoming proposed regulations in the Federal Register.

• For this purpose, Notice 2022-61 applies principles from historic “beginning of construction” guidance issued pursuant to the Section 45 PTC and Section 48 ITC (including Notices 2013-29, 2013-60, 2014-46, 2015-25, 2016-31, 2017-04, 2018-59, 2019-43, 2020-41, and 2021-41) to the CEITC and CEPTC.
• The Notice acknowledges that Notice 2025-42 provides a beginning of construction standard that applies only for the limited purpose of the termination of the CEITC and CEPTC for solar and wind facilities that have not begun construction by July 4, 2026.

Taxpayers may rely on the safe harbors in the Notice to calculate the applicable MACR for (i) any qualified facility or EST the construction of which begins before the date that is 60 days after the date of publication of forthcoming safe harbor tables under Section 7701(a)(52)(D)(iii)(I) or (ii) eligible components sold in taxable years beginning on or before the date that is 60 days after date of publication of forthcoming safe harbor tables under Section 7701(a)(52)(D)(iii)(I).

Foreign-Influenced Entity: Licensing Agreements

The Notice describes rules that the Treasury Department and the IRS expect to include in the forthcoming proposed regulations for determining the application of certain PFE restrictions.

Notably, the Notice clarifies that, for purposes of the FIE definition in Section 7701, an SFE is determined to exercise effective control as a result of any contract, agreement, or other arrangement that fulfills one of the listed qualities in Section 7701(a)(51)(D)(ii)(III)(aa)(AA) through (GG), including a licensing agreement for the provision of intellectual property with respect to a qualified facility entered into or modified after July 4, 2025.

• Some advisors have expressed concerns that any grant of a right to use intellectual property belonging to an SFE confers effective control. We observe that the applicable language applies to a “licensing agreement for the provision of intellectual property”, which arguably does not include agreements (e.g., equipment supply contracts) the primary purpose of which is unrelated to the licensing of IP and any license embedded is ancillary in nature. Furthermore, because many project contracts (e.g., supply contracts, EPC contracts, etc.) include IP licenses, this reading of the statute would cause many routine project contracts to confer “effective control”, a result that seems absurd.

Request for Comments

The Notice includes a request for comments by March 30, 2026 with respect to whether further guidance is needed to clarify how to determine total direct costs of a qualified facility or EST, anti-circumvention rules, and what substantiation and documentation should be required to support compliance with anti-circumvention rules, such as to demonstrate the beginning of construction has occurred for purposes of the PFE and material assistance rules.

Conclusion

It is perhaps unfortunate for the CEITC and CEPTC that Treasury and the IRS prioritized the material assistance guidance. Given that many sponsors used beginning of construction strategies to ensure significant portions of their pipelines would not be subject to the material assistance requirements, the need for guidance on the PFE and effective control rules is even more pressing.

However, the Notice provides welcome relief. Many feared the material assistance requirements were a poison pill for the renewables industry. Fortunately, Notice 2026-15 sets forth rules, including safe harbors, that incorporate familiar principles from the domestic content guidance. The Notice will be very helpful for projects eligible for the safe harbors, including solar, wind, and battery projects and domestic manufacturers of inverters, solar modules, and battery packs/modules. On the other hand, supply chains must evolve to enable manufactured products to satisfy increasingly stringent requirements. In addition, the path to satisfying the material assistance requirements will be more difficult for projects and manufacturers that cannot take advantage of the safe harbors.

We have been working with sponsors on procurement strategies and manufacturers on their supply chain strategies, and we will be incorporating the guidance from Notice 2026-15 into these. Please feel free to reach out to us if you would like to discuss Notice 2026-15 or the PFE rules more generally.e. Please feel free to reach out to us if you would like to discuss Notice 2026-15 or the PFE rules more generally.

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Gibson Oddderstol also contributed to this article. He is not licensed to practice law in any jurisdiction; bar admission pending.

In 2025, artificial intelligence (AI)-enabled cyber attacks rose 47 percent globally, according to DeepStrike’s ‘AI Cyber Attack Statistics 2025, Trends, Costs, Defense’ analysis. Cyber criminals are increasingly using AI across the attack lifecycle – both to find and exploit weaknesses faster and to deepen and scale intrusions once inside a victim’s environment.

Legally, businesses are often judged by a ‘reasonable security’ standard, which is a moving target requiring risk-based controls, integration of AI into security programmes with human oversight, employee training on AI-enabled threats, and defensive AI tools that are properly configured, monitored and regularly reviewed.

Click here to read the full article in Financier Worldwide Magazine.

In This Update

Covering legal developments and regulatory news for funds, their advisers, and industry participants for the quarter ended December 31.

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Rulemaking and Guidance

• SEC No-Action Letter: Expanding Custody Options for Crypto Assets With State Trust Companies
• SEC Division of Examinations Announces 2026 Priorities
• Key Takeaways From FINRA’s 2026 Annual Regulatory Oversight Report
• The Division of Examinations Publishes a Risk Alert to Promote Compliance with the Marketing Rule

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Click here to read this issue.

Troutman Pepper Locke’s Investment Management Group serves a wide range of businesses in the investment management community. Our practice involves three general areas: representation of registered investment companies and registered investment advisors, representation of alternative investment funds and investors in alternative products, and counseling regarding securities regulation, enforcement and litigation. Contact any of our professionals if you have questions about this update or any other investment management issues.

On January 6, 2026, the Food and Drug Administration (FDA) issued its General Wellness: Policy for Low Risk Devices[1] guidance (the General Wellness Guidance), signaling that it does not intend to enforce traditional medical device requirements for “general wellness products,” including many wearables and apps that promote healthy lifestyle goals. As a result, wellness trackers that qualify as general wellness products will not face the same premarket scrutiny or presubmission cybersecurity expectations that apply under FDA’s June 2025 guidance, Cybersecurity in Medical Devices: Quality System Considerations and Content of Premarket Submissions (the Cybersecurity Guidance).[2] But the absence of FDA oversight does not make these technologies low risk: whether regulated devices or general wellness products, they collect large volumes of sensitive data and remain attractive targets for threat actors, with common security weaknesses leading to unauthorized access, extortion, and fraud.

General wellness products also sit at the intersection of overlapping regulatory regimes. HIPAA applies only when an entity is a “covered entity” or “business associate,” a category many wellness‑tracker developers do not meet. FDA requirements apply when a product qualifies as a “medical device.” Even when FDA exercises enforcement discretion, the Federal Trade Commission’s (FTC) Health Breach Notification Rule (HBNR) and a growing patchwork of state data breach and privacy laws continue to govern the collection, use, and unauthorized access of health and wellness information.

This article is the first in a three‑part series: Part One surveys the overlapping frameworks (HIPAA, HBNR, and key state laws); Part Two examines FDA’s General Wellness Guidance; and Part Three addresses incident response and why organizations still need robust cybersecurity and response capabilities.

The Interlocking Frameworks for General Wellness Products

1) FDA’s Cybersecurity Guidance and Its Applicability to General Wellness Products

In June 2025, FDA issued its final Cybersecurity Guidance superseding its 2023 final guidance on cybersecurity in medical devices. The updated guidance clarifies compliance expectations for “cyber devices”[3] under Section 524B of the federal Food, Drug, and Cosmetic Act (FDCA), which requires manufacturers to design, develop, and maintain processes that provide “reasonable assurance” of cybersecurity, including postmarket updates, patches, and a plan to monitor, identify, and address vulnerabilities.[4] The Cybersecurity Guidance incorporates these requirements into Quality System requirements and advises manufacturers to address them in a Cybersecurity Management Plan (CMP) submitted with their premarket submissions. The CMP should include the following elements:

• Personnel responsible;
• Sources, methods, and frequency for monitoring and identifying vulnerabilities;
• Identification and addressing of vulnerabilities identified by the Cybersecurity and Infrastructure Security Agency;
• Periodic security testing;
• Timeline to develop and release patches;
• Update processes;
• Patching capability;
• Description of coordinated vulnerability disclosure process; and
• Description of how the manufacturer intends to communicate forthcoming remediations, patches, and updates to customers.  

FDA will review the CMP as part of its safety and effectiveness review, treat cybersecurity risks like any other safety risk, and may reject premarket submissions that do not provide adequate information or a “reasonable assurance” of cybersecurity.

The General Wellness Guidance identifies certain would-be devices as “general wellness products,” which FDA views as falling outside the FDCA definition of “device”[5] and therefore outside FDA regulation. The General Wellness Guidance provides a two-part definition for general wellness devices.  To qualify, a product must (1) be intended only for general wellness use (such as maintaining or encouraging a general state of health, or supporting healthy lifestyle choices that are well‑accepted to reduce the risk or impact of certain chronic diseases or conditions), and (2) present a low risk to user safety. Products that do not meet both criteria are treated as devices subject to FDA oversight.

Because FDA has determined that general wellness products fall outside its regulatory scope, they are not subject to the FDCA’s premarket or postmarket requirements, including the extensive obligations in the Cybersecurity Guidance.

2) HIPAA’s Breach Notification Rule

• a) Who Does It Govern?

FDA’s General Wellness Guidance signals that general wellness products will not be regulated as medical devices, but they still sit within the broader health privacy ecosystem. HIPAA and its HBNR still govern “covered entities” (such as health plans, most health care providers conducting standard electronic transactions, and health care clearinghouses) and their “business associates” (service providers that handle protected health information (PHI) on behalf of a covered entity for those entities, such as IT, cloud providers, billing or analytic providers). Business associates are directly regulated under HIPAA with respect to the PHI they handle and must notify the covered entity when they discover a breach. Thus, even if FDA does not treat a general wellness product as a device, its manufacturer or operator qualifies as a HIPAA business associate when it receives, creates, maintains, or transmits PHI on behalf of a covered entity — for example, a cardiac monitoring platform that stores and analyzes identifiable heart rhythm data for clinicians under a Business Associate Agreement (BAA).

• b) What Types of Information Does It Govern?

FDA’s interpretation that general wellness products are not regulated devices does not alter HBNR, which continues to strictly protect PHI when these products are used in clinical or plan-sponsored settings. PHI is individually identifiable health information held or transmitted by a covered entity or business associate in any form — electronic, paper, or oral — that relates to an individual’s past, present, or future physical or mental health or condition, the provision of care, or payment for care, and that includes identifiers that can reasonably be used to identify the person. Identifiers range from names and Social Security numbers to combinations of dates, addresses, or device identifiers that can be tied back to an individual. If data from a general wellness product is integrated into a provider’s record system or plan platform in a way that meets this definition, it becomes PHI, regardless of FDA’s enforcement posture. Properly de‑identified data, where the risk of reidentification is very low, falls outside HIPAA and HBNR.

3) TC Health Breach Notification Rule

FDA’s General Wellness Guidance removes device‑level oversight for general wellness products, but the FTC’s HBNR is designed to catch exactly the kind of consumer health apps and wearables that fall outside HIPAA. Adopted in 2009, HBNR applies to entities that handle personal health records that are not PHI under HIPAA and functions as a “catch-all” breach rule for health apps, wellness trackers, and connected devices that are not operating as HIPAA covered entities or business associates. The FTC’s 2021 policy confirmed that health apps and connected devices that collect or use consumers’ health information must comply with HBNR, and 2024 amendments clarified that the Rule expressly covers personal health information in health apps, fitness trackers, and other wearable devices — precisely the products FDA is now treating as low‑risk general wellness products.

For example, in May 2023, the FTC charged a fertility app developer with violating the FTC’s HBNR by secretly sharing users’ sensitive health information with third parties without adequate encryption. Under a proposed order, the app developer agreed to pay a $100,000 civil penalty.[6]

• a) Who Does It Govern?

In the wake of FDA’s January 6 guidance, many general wellness product companies may not see themselves as “medical device manufacturers,” but they may still be squarely covered by HBNR. The rule applies to foreign and domestic vendors of personal health records (PHRs), PHR‑related entities, and third‑party service providers that maintain information about U.S. residents, while explicitly excluding HIPAA covered entities and entities insofar as they act as business associates.[7] In practice, if a wellness tracker or app that qualifies as a general wellness product maintains electronic health information about an individual and can draw that information from multiple sources, its provider is likely a PHR vendor or related entity.[8] That means the shift away from FDA medical‑device oversight does not eliminate legal exposure — HBNR becomes the primary breach‑notification framework for many wellness trackers.

• b) What Types of Information Does It Govern?

HBNR covers “PHR identifiable health information” in PHRs and related services that fall outside HIPAA, which closely aligns with data collected by modern wellness trackers. This includes individually identifiable health information (e.g., conditions, treatments, biometrics, reproductive and genetic data, symptoms, and other health measurements) created, received, or stored by a PHR vendor, PHR‑related entity, or third‑party service provider, particularly when drawn from multiple sources such as apps, devices, or websites.[9] Because many wellness trackers aggregate data from wearables, phones, and third‑party services, they may qualify as general wellness products for FDA purposes, but HBNR still treats unauthorized disclosures of their data as “breaches” that trigger legal obligations.

4) State Data Breach and Privacy Laws

FDA’s General Wellness Guidance clarifies that FDA will not regulate general wellness products as devices, but it does not affect state data breach and privacy laws, which often protect the same health data these products collect. State breach notification laws generally apply to entities that own, license, maintain, or otherwise handle residents’ “personal information,” regardless of whether they are traditional health care providers or FDA‑regulated device manufacturers. This includes wellness app developers, wearable manufacturers, fitness platforms, menstrual or fertility tracking apps, and other consumer‑facing technology companies that collect or analyze health‑related data. As a result, even if wellness trackers qualify as general wellness products and fall outside FDA device regulation, they may still face significant cybersecurity and notification obligations under state law.

For example, in September 2020, a fertility-tracking app entered into a stipulated judgment with the California Department of Justice over alleged violations of California medical privacy and data security laws. The app collected highly sensitive sexual and reproductive health information but allegedly had basic security vulnerabilities and failed to recognize its obligations under the Confidentiality of Medical Information Act (CMIA), which extends beyond federal law to cover health apps. As part of the settlement, the company agreed to pay $250,000.[10]

• a) Who Do They Govern?

State data breach statutes generally focus not on whether a product is an FDA‑regulated device, but on whether an entity holds covered “personal information” about state residents. This brings many wellness‑tracker companies within scope, even if they view themselves as lifestyle or consumer tech rather than health care providers. So, while FDA may not impose pre-market cybersecurity obligations on general wellness products, state attorneys general and other regulators can still enforce state breach and privacy laws if these trackers mishandle covered data.

• b) What Types of Information Does It Govern?

Many state breach statutes define “personal information” to include medical information, health insurance information, and biometric data — categories that closely track what wellness trackers collect. “Medical” or “health” information often covers an individual’s medical history, physical or mental condition, or treatment, while “biometric data” includes identifiers like fingerprints, facial recognition, or iris scans used by some wearables. As a result, data from consumer tools that infer health conditions (e.g., depression), estimate metrics (e.g., blood pressure, sleep), or track reproductive or sexual health may qualify as protected medical or health information under state law, even if FDA classifies them as “general wellness products.” In addition, several states (including California, Washington, Colorado, Connecticut, and Virginia) have comprehensive privacy laws that treat health data as “sensitive,” imposing heightened requirements on its collection, use, and sharing.

***

For organizations developing or deploying wellness apps, partnering with outside counsel can help ensure you address the full multilayered regulatory landscape.

In Part Two of this series, we will take a closer look at FDA’s General Wellness Guidance and how companies can position their products in light of FDA’s current enforcement posture.

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[1] General Wellness: Policy for Low Risk Devices | FDA

[2] Cybersecurity in Medical Devices: Quality System Considerations and Content of Premarket Submissions | FDA

[3] Section 524B of the FDCA defines “cyber device” as a device that meets all of the following criteria (1) includes software validated, installed, or authorized by the sponsor as a device or in a device; (2) has the ability to connect to the internet; and (3) contains any such technological characteristics validated, installed, or authorized by the sponsor that could be vulnerable to cybersecurity threats.

[4] 21 U.S.C. § 360n-2(b).

[5] The term “device” is defined in 201(h) of the FD&C Act to include an “instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including any component, part, or accessory, which is …intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man … or intended to affect the structure or any function of the body of man…” and “does not include software functions excluded pursuant to section 520(o) of the FD&C Act.”

[6] Federal Trade Commission, Ovulation Tracking App Premom Will Be Barred from Sharing Health Data for Advertising Under Proposed FTC Order (May 17, 2023), https://www.ftc.gov/news-events/news/press-releases/2023/05/ovulation-tracking-app-premom-will-be-barred-sharing-health-data-advertising-under-proposed-ftc.

[7]  Id.

[8] FTC, Complying with the FTC’s Health Breach Notification Rule; FTC Rule overview; 16 C.F.R. § 318.1(a).

[9] 16 C.F.R. § 318.2

[10] California Office of the Attorney General, Attorney General Becerra Announces Landmark Settlement Against Glow Inc. – A Fertility-Tracking App That Mishandled Users’ Sensitive Health Information (press release), https://oag.ca.gov/news/press-releases/attorney-general-becerra-announces-landmark-settlement-against-glow-inc-%E2%80%93.

State attorneys general increasingly impact businesses in all industries. Our nationally recognized state AG team has been trusted by clients for more than 20 years to navigate their most complicated state AG investigations and enforcement actions.

State Attorneys General Monitor analyzes regulatory actions by state AGs and other state administrative agencies throughout the nation. Contributors to this newsletter and related blog include attorneys experienced in regulatory enforcement, litigation, and compliance. Also visit our State Attorneys General Monitor microsite.

Contact our State AG Team at StateAG@troutman.com.

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Troutman Pepper Locke Spotlight

States Use App Store Controls to Keep Online Content From Minors
By Chris Carlson, Lauren Fincher, and Jessica Birdsong

New state age verification and parental consent laws are slated to take effect in 2026 to shield children from harmful online content, creating significant compliance obligations and heightened enforcement risk for both app developers and app stores.

Read more

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Single State AG News

Connecticut AG Initiates Investigation Into Private Equity Group Over Conditions at Apartment Complex
By Troutman Pepper Locke State Attorneys General Team

On February 9, Connecticut Attorney General (AG) William Tong announced an investigation into the owners and managers of the Concierge Apartments in Rocky Hill, CT, for potential violations of the Connecticut Unfair Trade Practices Act after frozen pipes burst and tenants were displaced.

Read more

Texas and Florida AGs Issue Opinions Ratifying Trump Administration’s Executive Orders Dismantling DEI Policies and Programs
By Troutman Pepper Locke State Attorneys General Team

Recent opinions by the Texas attorney general (AG) and the Florida AG assert that their states’ race- and sex-conscious laws and policies are unconstitutional. The opinions align with President Donald Trump’s 2025 Executive Orders 14151 and 14173 (collectively, the executive orders), which seek to end gender- and race-based contracting practices and dismantle diversity, equity, and inclusion (DEI) initiatives.

Read more

California AG Resolves Litigation Alleging Elevated Levels of Cadmium and Lead in Seafood Products
By Troutman Pepper Locke State Attorneys General Team

California Attorney General (AG) Rob Bonta recently announced a consent judgment resolving allegations that the Pacific American Fish Company, Inc. (PAFCO), a seafood distributor and processor, had sold frozen seafood products with elevated levels of lead and cadmium in California without the warnings required by state law.

Read more

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AG of the Week

Steve Marshall, Alabama

Steve Marshall was sworn in as the 48th attorney general (AG) of the state of Alabama on February 10, 2017. Initially appointed to the position, he was subsequently elected by Alabama voters to full terms and has served as the state’s chief legal officer throughout his tenure. In this capacity, he has overseen criminal prosecutions, represented the state in civil and appellate matters, and provided legal guidance to state agencies and officials on issues affecting public policy and state governance. Having reached term limits in the AG’s office, Marshall is currently running for the U.S. Senate seat being vacated by Senator Tommy Tuberville, who is running for governor in 2026.

Before becoming AG, Marshall served for 16 years as the district attorney for Marshall County. As district attorney, he prosecuted a broad range of criminal cases, worked with local and state law enforcement agencies, and managed the operations of the district attorney’s office in a largely rural jurisdiction. His responsibilities included overseeing jury trials, coordinating with victim services, and supervising staff in the office.

Marshall received his undergraduate degree from the University of North Carolina at Chapel Hill, graduating with academic honors. He earned his law degree from The University of Alabama School of Law, also with academic honors. While in law school, he was a member of the Alabama Law Review and was selected for membership in the Order of the Coif.

Marshall and his wife, Tammy, share three children and maintain longstanding ties to their community in Alabama.

Alabama AG in the News:

• Marshall warns that scammers on online dating platforms often build fake emotional relationships to steal money and personal information, and urges Alabamians to never send money or financial details to online contacts.
• Marshall joined other state AGs in an amicus brief urging the U.S. Supreme Court to review a Ninth Circuit decision upholding the Los Angeles Unified School District’s COVID-19 vaccine mandate, under which more than 500 employees were fired.

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Upcoming AG Events

• February: AGA | Chair’s Initiative | Santa Fe, NM
• March: RAGA | Spring Meeting | New Orleans, LA
• April: NAAG | Annual Meeting | Charleston, SC

For more on upcoming AG Events, click here.

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Troutman Pepper Locke’s State Attorneys General team combines legal acumen and government experience to develop comprehensive, thoughtful strategies for clients. Our attorneys handle individual and multistate AG investigations, proactive counseling and litigation, and manage ancillary regulatory issues. Our successful approach has been recognized by Chambers USA, which ranked our practice as a leader in the industry.

Our Cannabis Practice provides advice on issues related to applicable federal and state law. Marijuana remains an illegal controlled substance under federal law.

This article was republished on Thomson Reuters Westlaw Today on March 11, 2026.

FinCEN has issued an order granting exceptive relief from the longstanding requirement that covered financial institutions (CFIs) identify and verify the beneficial owners of legal entity customers every time a new account is opened. CFIs now need to collect and verify beneficial ownership information once per customer and then update it only when risk or new information warrants. While CFIs must still comply with all other Bank Secrecy Act (BSA) and anti-money laundering and counter-financing terrorism (AML/CFT) obligations, the new order represents an easing of the requirements established by FinCEN’s Customer Due Diligence regulation (the 2016 CDD rule) regarding the diligence CFIs must perform on legal entity customers as part of AML/CFT programs. Companies should consider whether it makes sense to maintain stricter past compliance practices or revise current policies to fit the new rules based on an individualized risk assessment.

What Has Changed?

Under the CDD rule, CFIs were required, for each legal entity customer (e.g., corporations, limited liability companies, and partnerships), to identify the beneficial owners under both the ownership and control prongs, collect required information (name, address, date of birth, and Social Security number or other permitted identification number), and verify the identity of each beneficial owner, all “at the time a new account is opened[.]” In practice, this required collection at every new account opening, even for established customers that frequently opened additional accounts.

The order granting exceptive relief is part of FinCEN’s implementation of the Corporate Transparency Act (CTA), which directs FinCEN to revise the 2016 CDD rule, and a broader federal effort, reinforced by Executive Order 14192 (Unleashing Prosperity Through Deregulation), to reduce regulatory burdens that provide limited incremental AML/CFT benefit beyond initial, risk‑based due diligence. CFIs are no longer required to reidentify and reverify beneficial owners each time a legal entity customer opens another account. Instead, they must identify and verify beneficial owners in the following three situations only:

1. Initial Relationship: When a legal entity customer first opens an account with the institution.  
2. Reliability Concerns: Any time thereafter when the institution has knowledge of facts that would reasonably call into question the reliability of previously obtained beneficial ownership information.  
3. Risk-Based Triggers: As needed based on the institution’s risk-based procedures for ongoing customer due diligence, including monitoring and periodic updates.  

Outside of these three scenarios, repeat collection and verification of beneficial ownership information at every account opening is no longer required.

Who Is Covered?

The relief applies to CFIs which include, among others:

• Banks;  
• Broker-dealers in securities;  
• Mutual funds; and  
• Futures commission merchants and introducing brokers in commodities.  

The relief applies with respect to “legal entity customers” (e.g., corporations, LLCs, general partnerships, and similar entities formed by filing with a secretary of state or equivalent authority), subject to existing exemptions. It does not alter the existing exemptions and limitations.

Ongoing Obligations Remain

The exceptive relief does not change the core elements of an AML/CFT program. CFIs must still:

• Maintain a written AML/CFT program that includes risk-based customer due diligence procedures, including beneficial ownership procedures.  
• Conduct ongoing monitoring to: (i) identify and report suspicious activity; and (ii) maintain and, on a risk basis, update customer information, including beneficial ownership information.  
• Comply with all applicable program, recordkeeping, and reporting requirements under the BSA and its implementing regulations.  

Importantly, when a risk-based trigger arises:

• Institutions may rely on previously obtained beneficial ownership information if the customer certifies or confirms (verbally or in writing) that the information remains accurate and up to date; and  
• The institution must maintain a record of that certification or confirmation (including a record of verbal confirmations).  

If the customer cannot confirm accuracy, or the institution has reason to doubt the information, the institution must reidentify and reverify the beneficial owners in accordance with the CDD rule.

Discretion to Exceed the Minimum Requirements

FinCEN is not prohibiting institutions from implementing and adhering to stricter practices.

• Institutions may decide to continue to collect and verify beneficial ownership information at each account opening if a more frequent practice aligns with risk appetite and internal policies.  
• The extent to which an institution uses this exceptive relief is within its discretion, provided its approach is consistent with its risk-based AML/CFT program and other legal obligations.  

Practical Implications and Next Steps for Covered Financial Institutions

1. Policy and Procedure Updates. CFIs should revise their customer due diligence and account opening procedures so that beneficial ownership information is collected and verified at initial account opening and recollected or reverified when reliability concerns arise or risk-based triggers from ongoing monitoring warrant such action. CFIs should also establish clear thresholds for when employees must escalate and reconfirm or update beneficial ownership information.  
2. Risk-Based Framework Enhancements. CFIs should strengthen their risk-rating methodologies to ensure higher-risk legal entity customers are subject to more frequent review and potential reverification, and clearly define the specific events — such as unusual transaction activity, negative media, ownership or control changes, or major structural changes — that will trigger review.  
3. Documentation and Recordkeeping. CFIs should implement controls to record customer certifications or confirmations (including verbal confirmations) that previously provided beneficial ownership information. This is a best practice to ensure recorded information remains accurate, and to document the rationale when a CFI decides not to refresh beneficial ownership information at new account openings where risk considerations remain relevant.  
4. Training and Communication. CFIs should train front-line staff, relationship managers, and compliance personnel on the scope and application of the new exceptive relief, how to handle customer confirmations going forward, and when to escalate the need for updated beneficial ownership information. Compliance personnel and legal should work on efforts to communicate these changes to frequent legal entity customers to streamline the account opening process while reinforcing robust monitoring and adhering to AML controls.  
5. Coordination With CTA Framework. CFIs should coordinate their internal beneficial ownership practices with emerging beneficial ownership information reporting frameworks under the CTA to avoid unnecessary duplication and ensure consistency between internally maintained and externally filed ownership information for each account.

This article was republished on Recharge News on March 3, 2026.

On December 22, 2025, the Bureau of Ocean Energy Management (BOEM) issued short and nearly identical lease suspension orders that halted construction on five utility-scale offshore wind projects off Virginia, New York, Rhode Island, and Massachusetts, alleging new and classified national security threats. These suspensions sparked an immediate wave of litigation as the affected developers sought court orders that would allow them to resume work and keep to their carefully scripted construction timelines. Six weeks later, the dust has settled on a clean sweep for the offshore wind industry: all five projects won injunctions from four different judges in three different jurisdictions, appointed by one Democratic and two Republican presidents. Now that all construction of these projects is back on track, what lessons can we learn from this episode?

The Suspension Orders

The December suspension orders were not the first time in the past year that BOEM has tried to disrupt an offshore wind project in active construction. Having suspended all new wind energy permitting in a day one presidential memorandum, BOEM then took action in April to issue a “stop-work order” against Empire Wind, an 812-megawatt (MW) wind farm that had just started construction outside of New York Harbor, based on undisclosed environmental concerns. While this order was reversed in the wake of a widely reported deal between the White House and New York Governor Kathy Hochul to support one or more pending gas pipelines, BOEM then issued a second “stop-work order” in August targeting Revolution Wind, a 704 MW project off the coast of Rhode Island that was 80% complete, based on “concerns related to the protection of national security interests.” This time, the developer sued and obtained an injunction a month later[1] — an order the federal government elected not to appeal.

Several months later, BOEM issued orders requiring an indefinitely extendable 90-day pause on all construction activities not just for Empire Wind (now 60% complete) and Revolution Wind (now 87% complete), but also for three other projects in varying stages of completion:

• Vineyard Wind 1, an 800 MW project off Massachusetts that was 95% complete and generating electricity from 44 of its 62 turbines — turbines that, notably, were exempted from the suspension order;  
• Coastal Virginia Offshore Wind (CVOW), a 2,600 MW project off Virginia that was almost 70% complete; and  
• Sunrise Wind, a 924 MW project off New York that was approximately 45% complete.  

BOEM stated that this wave of suspensions was based on an “additional assessment” provided to it by the Department of War (DoW) “regarding the national security implications of offshore wind projects … including the rapid evolution of relevant adversary technologies.”

The Motions for Injunctive Relief

Throughout the following month, each of the developers filed lawsuits and subsequent motions seeking to stay or enjoin the December suspension orders.

Project	Caption	Judge (appointed)
Coastal Virginia Offshore Wind	Va. Elec. & Power Co. v. U.S. Dep’t of the Interior, No. 25-cv-830 (E.D. Va., filed Dec. 23, 2025)	Walker (Biden)
Revolution Wind	Revolution Wind, LLC v. Burgum, No. 25-cv-02999 (D.D.C., filed Jan. 1, 2025)	Lamberth (Reagan)
Empire Wind	Empire Leaseholder, LLC v. Burgum, No. 26-cv-00004 (D.D.C., filed Jan. 1, 2026)	Nichols (Trump)
Sunrise Wind	Sunrise Wind LLC v. Burgum, No. 26-cv-00028 (D.D.C., filed Jan. 6, 2026)	Lamberth (Reagan)
Vineyard Wind	Vineyard Wind 1, LLC v. U.S. Dep’t of the Interior, No. 26-cv-10156 (D. Mass., filed Jan. 15, 2026)	Murphy (Biden)

While the circumstances of each specific project varied, the legal arguments made by each developer in support of preliminary injunctive relief were similar. On the merits, each of the developers detailed through declarations the rigorous process by which BOEM and DoW considered the projects’ national security concerns and imposed mitigation measures prior to approval. They each argued that BOEM’s suspension orders were (a) arbitrary and capricious under the Administrative Procedure Act for failing to provide a satisfactory explanation for the action, failing to adequately explain the agency’s change in position, and failing to account for developers’ reliance interests; and (b) exceeded BOEM’s authority under the Outer Continental Shelf Lands Act (OCSLA), its regulations, and the terms of developers’ leases. Additionally, all but one of the developers asserted (c) that the suspension orders deprived them of a property right without due process in violation of the Fifth Amendment. Each of the developers also described the context in which the suspension orders were issued, including statements made by the president and Interior Secretary Doug Burgum expressing an intent to shut down the offshore wind industry, as well as prior agency actions against projects and the industry as a whole — many of which other courts have struck down as arbitrary and capricious.

On irreparable harm, each developer provided declarations detailing the daily financial hit they were taking from the lease suspension, the ripple effects that the delay had on their respective construction schedules, the existential project risk if delays caused them to lose access to critical construction vessels, and (in some instances) the possibility of losing project financing. In many cases, the developers also buttressed their balance-of-equities and public-interest arguments through the filing of amicus briefs from labor groups who faced job losses if the projects failed and grid operators who were relying on the energy from these projects. Several states also filed their own suits that were then joined with the developers’ suits.

In its briefing and at oral arguments, the government offered for ex parte,in camera review a sealed DoW declaration containing the purported national security evidence in each of the courts where the order was challenged. The government also argued that matters of national security should be accorded nearly absolute deference — and that they should essentially override all other considerations when deciding whether a preliminary injunction is warranted under the four-pronged test in Winter v. Natural Resources Defense Council Inc., 555 U.S. 7 (2008). The government also vigorously attacked the developers’ claims of irreparable harm, arguing that the harms asserted were purely economic and suggesting that the developers could eventually be made whole by suing the government for breach of contract under the Tucker Act.

The Preliminary Injunction Decisions – Common Threads

All five judges ruled decisively in favor of offshore wind developers and enjoined the suspension orders. Their opinions, all delivered from the bench, had the following throughlines:

• National Security: Each of the judges noted logical flaws in the government’s national security claims that tended to undermine the purported seriousness of the government’s concerns. Several judges expressed confusion that while the purported national security risks related to the operation of the turbines and not their construction, the suspension orders did the exact opposite: pausing construction while allowing all operating turbines to keep spinning. Judge Murphy in his Vineyard opinion labeled this discrepancy as “irrational.” Several judges noted the government’s unwillingness to even discuss the potential for mitigation with developers, each of whom submitted declarations describing their substantial experience mitigating radar interference concerns in offshore wind projects. Several judges made adverse inferences from the one-month gap between the date DoW briefed BOEM on the purported national security concerns and the date BOEM issued suspension orders. And while the judges were each careful not to reveal the contents of the classified information in open court, Judge Walker in his CVOW opinion noted inconsistencies between the sealed and unsealed portions of the government’s evidence.  
• Judicial Restraint: All of the judges grounded their opinions in the APA alone and declined to rule on whether the suspension orders violated OCSLA or the Fifth Amendment. Even within their APA rationales, the judges took great pains to clarify that their rulings that the government had acted arbitrarily and capriciously were based only on the evidence proffered by the government and the developers’ sworn declarations. Many of the rulings were explicit that they were not based on political pretext or evidence of this administration’s animus toward offshore wind or renewable energy generally.  
• Lack of Particularity: Several judges found it significant that the suspension orders and supporting declarations were functionally identical for each of the five projects, and contained few indicia that BOEM had considered the specific circumstances of each of the projects in deciding to suspend them. At least one judge noted the untailored nature of the order.  
• Harms: The courts grounded their findings of irreparable harm on the full gamut of evidence offered by the developers, rather than narrowing in on one decisive factor. This meant considering the size of the daily financial losses, the risk of losing access to specialized vessels, and potential harms to project finance. For the CVOW project in particular, Judge Walker also noted that Dominion Energy would suffer reputational harm because Virginia ratepayers were going to pay most of the project’s costs whether or not it was completed.  

Lessons Learned … and What Comes Next

For companies building controversial infrastructure projects that are likely to be the subject of litigation, these five offshore wind suspension rulings offer several key lessons. First, the decisions underscored the importance of a robust and persuasive administrative record — and the vulnerability of governmental actions that lack it. The recent suspension orders rested on thin records that were not bespoke for each project, and the judges repeatedly emphasized that they were limited only to considering the record that was before the agency at the time a decision was made. By contrast, the federal government has maintained a strong record of prevailing in litigation brought by third-party opponents of offshore wind projects, challenging BOEM’s pre-2025 approvals of those projects’ construction and operations plans (COPs). Those wins, which involved many of the same projects that were the subject of the December 22 suspension orders, were largely due to the fact that BOEM conducted years of environmental analysis and public comment before approving the projects’ COPs.[2]

Second, it is imperative that project developers keep detailed records of their interactions with permitting agencies and other regulators, as well as their internal compliance and finances, so that they can be prepared to offer robust declarations in response to either adverse governmental actions or citizen suits. Pivotal to offshore wind developers’ victories was their thorough documentation of their engagement with various federal agencies on national security issues, as well as the current and prospective financial losses suffered as a result of the suspension orders.

Third, these cases highlight the importance of regulatory certainty in infrastructure investments — as well as the power of the preliminary injunction in achieving rapid and meaningful results. The five offshore wind developers’ reliance on final federal permitting decisions, along with billions of dollars in investment, held fast thanks to the APA and the strong record backing the project approvals.

But the five rulings also leave serious questions unanswered. While it is noteworthy that each of the five judges concluded that an insufficiently supported assertion of national security interests cannot override the protections of the APA, it is unknown whether the outcome would have been the same if the administration had provided a more detailed, site-specific analysis. The cases also do not address whether OCSLA allows offshore energy projects to be suspended at any time for national security reasons, or if the statute and lease provisions place guardrails around that authority. The answer to this question could have grave implications in future administrations for offshore oil and gas production, as well as nascent offshore industries like deep seabed mining and carbon capture and sequestration.

Moreover, these rulings only protect these projects from these orders, and not possible follow-on orders that may rely on new rationales. Thus far, judges in these matters have only been willing to rule on the issues directly before them, and have been unwilling to act prospectively to exercise supervision over future adverse agency actions.

Overall, the cases demonstrate that the protections provided by the APA are meaningful. Developing a robust record of agency (and applicant) decision-making enables those protections to be effectuated should challenges to agency approvals arise in the future.

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[1] Revolution Wind, LLC v. Burgum, 25-cv-02999 (D.D.C. Sep. 22, 2025) [ECF No. 36].

[2] See, e.g., Seafreeze Shoreside, Inc. v. U.S. Dep’t of the Interior, 123 F. 4^th 1 (1st Cir. 2024); Committee for a Constructive Tomorrow v. U.S. Dep’t of the Interior, No. 1:24-cv-00774, 2024 WL 2699895 (D.D.C. May 24, 2024); Save Long Beach Island, Inc. v. U.S. Dep’t of Commerce, 25-cv-02214, 2025 WL 2996157 (D.D.C. Oct. 24, 2025); Green Oceans v. U.S. Dep’t of the Interior, 24-cv-00141, 2025 WL 973540 (D.D.C. April 1, 2025).

On February 6, 2026, the president issued Executive Order 14384 (the Order), rescinding the additional 25% ad valorem duties imposed on imports of Indian-origin goods under Executive Order 14329. This modification applies to goods entered for consumption, or withdrawn from warehouse for consumption, on or after 12:01 a.m. ET on February 7, 2026 (the effective date). Because India has pledged to stop importing Russian oil, increase purchases of U.S. energy, and expand defense cooperation with the United States, the president concluded that India is sufficiently addressing the national emergency and therefore decided it is appropriate to remove the additional duties. Executive Order 14385 directs the secretary of commerce to monitor whether India resumes importing Russian oil and, if it does, recommend whether to take further action, including reinstating the 25% additional duty.

Background

On August 6, 2025, President Trump issued Executive Order 14329, which imposed an additional 25% ad valorem rate of duty on imports of articles of India after determining that India was directly or indirectly importing Russian Federation oil. Those duties were implemented through Harmonized Tariff Schedule of the United States (HTSUS) headings 9903.01.84 through 9903.01.89 and subdivision (z) of U.S. Note 2 to Subchapter III of Chapter 99.

Key Aspects of the Order

The Order makes three key changes affecting imports of Indian-origin products:

1. Elimination of the additional 25% duty: The extra 25% ad valorem duty imposed under Executive Order 14329 is removed for goods of India entered for consumption, or withdrawn from warehouse for consumption, on or after the effective date. Regular duties and any other applicable tariffs (e.g., tariffs issued pursuant to Section 232 of the Trade Expansion Act of 1962 (Section 232 Tariffs), tariffs imposed under Section 301 of the Trade Act of 1974 (Section 301 Tariffs), and antidumping and countervailing duties (AD/CVD)) may still apply, but this specific 25% surcharge no longer does for qualifying entries.  
2. Termination of Chapter 99 provisions: The special Chapter 99 tariff provisions used to assess the additional 25% duty (HTSUS headings 9903.01.84 through 9903.01.89 and subdivision (z) of U.S. Note 2 to Subchapter III of Chapter 99) are terminated. As a result, brokers and importers must stop using these Chapter 99 numbers for entries on or after the effective date, and U.S. Customs and Border Protection (CBP) will no longer accept them in its systems.  
3. Refunds of duties previously paid: Where duties were collected that are no longer owed because of this change, importers may be eligible for refunds. Any such refunds will be processed under existing law and CBP’s normal procedures (e.g., through post summary corrections (PSC) or protests), and will not be automatic (importers must take appropriate action to request them).  

CBP Implementation Guidance

CBP issued implementing guidance in CSMS #67702087, which sets out the operational details of this change and provides instructions for correcting entries filed after the effective date. The CBP guidance confirms that:

• Products of India entered as of the effective date of the Order are no longer subject to the additional 25% ad valorem duties imposed by Executive Order 14329; and  
• HTSUS headings 9903.01.84 through 9903.01.89 are no longer in use as of that time.  

CBP also notes that the reciprocal tariffs imposed under Executive Order 14257, as amended, pursuant to the International Emergency Economic Powers Act (IEEPA) (the Reciprocal Tariffs) remain in effect for products of Indian origin that do not qualify for an exemption. The elimination of the India-specific 25% duties does not affect other applicable tariff programs, including Section 232 Tariffs, Section 301 Tariffs, and AD/CVD.

Correcting Previously Filed Entries

CBP instructs filers to take corrective action as soon as possible for any entries filed under HTSUS headings 9903.01.84 through 9903.01.89 that were entered for consumption, or withdrawn from warehouse for consumption, on or after the effective date.

• Unliquidated entries:
  • For entries where estimated duties have already been deposited and the entries remain unliquidated, importers may file a PSC to request a refund.  
  • If the PSC is approved, the refund will be issued at liquidation.
• Liquidated entries:
  • For entries that have already liquidated, importers may seek a refund by filing a protest within 180 days of liquidation pursuant to 19 U.S.C. § 1514.

Practical Considerations for Importers

Importers sourcing from India should:

• Confirm entry dates for affected merchandise to determine whether the 25% duty properly applied.  
• Review recent entries to identify whether Chapter 99 provisions 9903.01.84 through 9903.01.89 were declared for entries on or after the effective date, and assess refund opportunities where appropriate.  
• Evaluate continued exposure under other tariff programs that remain in effect, including Reciprocal Tariffs, Section 232 Tariffs, Section 301 Tariffs, and AD/CVD.  
• Monitor ongoing developments, given the intersection of sanctions policy and tariff authority reflected in these actions, particularly for companies engaged in global supply chains involving India.