In a significant First Amendment ruling issued June 30, 2026, the U.S. Supreme Court held in National Republican Senatorial Committee v. Federal Election Commission that coordinated party expenditure limitations found in federal law violate the First Amendment. The six-justice majority concluded that the spending limits unconstitutionally burden political parties’ core speech and associational rights because they restrict political parties’ ability to speak, associate, and support their nominees through coordinated campaign activity.

Importantly, the ruling invalidates the federal coordinated party expenditure limits in 52 U.S.C. § 30116(d) and overrules the Court’s 2001 decision in FEC v. Colorado Republican Federal Campaign Committee, which had previously upheld limits on this type of spending. The Court concluded that the government’s interest in preventing corruption or the appearance of corruption did not justify the additional restriction and emphasized that campaign finance restrictions must target quid pro quo corruption, not generalized influence over candidates.

STATE LAW IMPLICATIONS

While the Court’s ruling addressed a specific federal law, its First Amendment reasoning is likely to extend to state campaign finance laws that similarly cap coordinated expenditures. State laws may now face serious constitutional challenges, particularly where the state rules limit a party unit’s ability to spend its own money in coordination with its endorsed or nominated candidates.

The ruling does not invalidate all campaign finance regulation of political parties. Federal contribution limits, disclosure requirements, earmarking restrictions, and anti-circumvention provisions likely remain enforceable so long as they do not function as caps on party-coordinated spending. The key distinction after NRSC v. FEC is likely to be between direct contributions to candidates and party-funded spending in support of candidates, which the Court treated as protected political speech and association.

MINNESOTA-SPECIFIC IMPACT

Minnesota law includes provisions that may be affected by the Supreme Court’s ruling. Minnesota Statute § 10A.27 governs contribution limits to candidates, including limits on the aggregate amount a candidate’s principal campaign committee may accept from political party units and dissolving principal campaign committees. In addition, Minnesota law treats certain approved expenditures, including coordinated expenditures, as contributions to candidates.

The interaction of Minnesota’s restrictions and the Supreme Court’s analysis of First Amendment protections is now uncertain. While likely vulnerable, Minnesota’s campaign finance framework is not identical to the federal laws.  For example, Minnesota does not cap contributions from individuals to party units, and Minnesota law separately defines “approved expenditures” (including coordinated expenditures) as a category distinct from direct monetary contributions. These structural differences could factor into any enforcement approach or future litigation.

NEXT STEPS

At the meeting of the Minnesota Campaign Finance and Public Disclosure Board on July 1, 2026, the Board acknowledged the potential impact of the NRSC v. FEC decision on current Minnesota law. The Board recognizes the need to provide guidance to Minnesota candidates and political party units, especially as the 2026 election approaches. While no specific direction was given, the Board agreed to convene again the following week to discuss opportunities to provide guidance. The Board also asked the Minnesota Attorney General’s office to provide perspective at the next meeting.

PRACTICAL TAKEAWAYS

The Supreme Court decision is likely to create new opportunities for political party involvement in candidate campaigns, but the scope of those opportunities in Minnesota will depend on how the Board, the Attorney General, and potentially the courts interpret Minnesota’s statutory framework after NRSC v. FEC.

Political parties, campaigns, and candidates operating in Minnesota should closely monitor forthcoming Board guidance and any Attorney General input regarding enforcement of  political party spending in light of NRSC v. FEC. Until further guidance is issued, parties and candidates should be cautious about assuming that Minnesota’s existing limits are unenforceable, particularly where proposed activity involves direct monetary contributions rather than party-funded spending.

If you have any questions about this decision or its impact on Minnesota campaign finance compliance, please contact Winthrop & Weinstine’s experienced Campaign Finance and Election Law team.

References

1. Federal Election Commission Summary of opinion On June 30, 2026, the United States Supreme Court issued its opinion in a case challenging the constitutionality of a federal limit on the extent to which political parties may make expenditures coordinated with federal candidates. The case is captioned National Republican Senatorial Committee v. Federal Election Commission, hereinafter referred to as NRSC v. FEC. 1 The federal limit on coordinated expenditures is codified at 52 U.S.C. § 30116(d).2 The limit varies based on the state and the office sought by the candidate, such that “The national committee of a political (ExtractPage1.pdf)
2. explicitly overruled that opinion, and concluded that the federal limit on coordinated expenditures by political parties is unconstitutional under the First Amendment. The opinion states that coordination between parties and their candidates is natural and traditional. But the modern congressional limits on political-party coordinated expenditures restrict that coordination and the party’s speech. The limits impair the party’s traditional forms of communication such as advertisements; preclude parties from amplifying the voice of their adherents; impose additional monetary costs and 1 National Republican Senatorial Committee v. Federal Election Commission, No… (ExtractPage1.pdf)
3. in coordination with an individual House candidate .”3 In 2001 the United States Supreme Court upheld, in a 5-4 opinion, the limit on coordinated expenditures by political parties in a case captioned Federal Election Commission v. Colorado Republican Federal Campaign Committee, commonly known as Colorado //.4 Yesterday the Court recognized that Colorado II is no longer good law, explicitly overruled that opinion, and concluded that the federal limit on coordinated expenditures by political parties is unconstitutional under the First Amendment. The opinion states that coordination between parties and their candidates is natural and traditional. But the modern congressional (ExtractPage1.pdf)
4. even the less rigorous test, closely drawn scrutiny.7 The Court rejected the theory that the limit could be justified based on “an interest in preventing a political party (as distinct from donors) from exercising undue influence on its candidates”, stating that “any influence a political party exerts over its candidates and officials ‘is not corruption’-it is ‘successful advocacy of ideas in the political marketplace and representative government in a party system.’ Colorado /, 518 U. S., at 646 (opinion concurring in judgment and dissenting in part)… (ExtractPage1.pdf, Page 1)
5. those concerns.” Ibid. (quotation marks omitted). The Court now recognizes “only one legitimate governmental interest for restricting campaign finances: preventing corruption or the appearance of corruption.” Id., at 206-207. Moreover, “Congress may target only a specific type of corruption-‘quid pro quo’ corruption. ” Id., at 207. And quid pro quo corruption in turn is something specific-contributions in exchange for official action. 5 NRSC v. FEC, 2026 WL 1868932, at *5-6 (quoting Mccutcheon v. FEC, 572 U. S. 185, 197 (2014)). 6 Id. at *6. 7 Id 8 Id. at *7-8… (ExtractPage1.pdf, Page 1)
6. However, the likelihood of such an interest seems low considering the Court’s explicit holding that the only corruption interest that could justify such a limit is quid pro quo corruption, which does not include undue influence exerted by a political party. The Court’s opinion does not appear to address direct contributions of money from party units to the campaign committees of candidates, which are limited under federal law. As a result, the opinion does not appear to invalidate limits on direct monetary contributions, but many of the same considerations discussed by the Court may apply to monetary contributions. (ExtractPage1.pdf, Page 3)
7. However, the likelihood of such an interest seems low considering the Court’s explicit holding that the only corruption interest that could justify such a limit is quid pro quo corruption, which does not include undue influence exerted by a political party. The Court’s opinion does not appear to address direct contributions of money from party units to the campaign committees of candidates, which are limited under federal law. As a result, the opinion does not appear to invalidate limits on direct monetary contributions, but many of the same considerations discussed by the Court may apply to monetary contributions. (ExtractPage1.pdf, Page 3)
8. MINNESOTA CAMPAIGN FINANCE BOARD Date: July 1, 2026 To: Board members Nathan Hartshorn, counsel From: Andrew Olson, Staff Attorney Telephone: 651-539-1190 Re: National Republican Senatorial Committee v. Federal Election Commission Summary of opinion On June 30, 2026, the United States Supreme Court issued its opinion in a case challenging the constitutionality of a federal limit on the extent to which political parties may make expenditures coordinated with federal candidates. The case is captioned National Republican Senatorial Committee v. Federal Election Commission, hereinafter referred to as NRSC v. FEC.1 The federal limit on coordinated expenditures is codified at 52 (ExtractPage1.pdf)
9. by the Court may apply to monetary contributions. Board staff will monitor how other states react to the Court’s decision. 15 Minn. Stat. § 10A.27, subd. 2. The dollar amounts are available within a chart of 2025-2026 election cycle segment contribution limits under the heading Aggregate Political Party Unit and Terminating Principal Campaign Committee Contribution Limit, available at cfb.mn.gov/pdf/camfin/. contrib_limits_2026.pdf. See also 2026 Minn. Laws ch. 101, § 15 (amending § 10A.27, subd. 2). 16 Minn. Stat. § 10A.275. See also 2026 Minn. Laws ch. 101, § 17 (amending § 10A.275). 17 Minn. Stat. §§ 10A.01, subd. 4, (ExtractPage1.pdf, Page 3)
10. include undue influence exerted by a political party. The Court’s opinion does not appear to address direct contributions of money from party units to the campaign committees of candidates, which are limited under federal law. As a result, the opinion does not appear to invalidate limits on direct monetary contributions, but many of the same considerations discussed by the Court may apply to monetary contributions. Board staff will monitor how other states react to the Court’s decision. 15 Minn. Stat. § 10A.27, subd. 2. The dollar amounts are available within a chart of 2025-2026 election cycle segment contribution (ExtractPage1.pdf, Page 3)
11. 177 (defining coordinated expenditures, which are a type of approved expenditure) provide that under certain circumstances, expenditures made by party units are approved expenditures made on behalf of, and therefore are contributions to, candidates. 17 There are at least two questions the Board may wish to consider in light of the Court’s opinion in NRSC v. FEC. First, does the opinion require the Board to exempt approved expenditures (including coordinated expenditures), and in-kind contributions more broadly, of party units when enforcing the limit imposed by Minnesota Statutes section 10A.27, subdivision 2? Second, does the opinion also require the (ExtractPage1.pdf, Page 3)
12. //, 533 U. S., at 469-471 (THOMAS, J., dissenting).5 The opinion notes that the Court applies strict scrutiny to restrictions on expenditures, and applies a “nominally ‘lesser but still rigorous standard of review” known as closely drawn scrutiny to limits on contributions. 6 The Court declined to decide whether coordinated expenditures should be treated as expenditures or contributions in deciding which test to apply, stating that the question “is ultimately academic” because the challenged limit fails even the less rigorous test, closely drawn scrutiny.7 The Court rejected the theory that the limit could be justified based on “an (ExtractPage1.pdf, Page 1)

The IRS has released Notice 2026-40, which provides transition guidance for the Opportunity Zone rules as amended by the One Big Beautiful Bill Act. The Department of the Treasury and the IRS have indicated that forthcoming proposed regulations are expected to include rules similar to those described in the Notice.[1]

For projects in previously designated Opportunity Zones, the most immediate practical issue addressed by the Notice is whether a Qualified Opportunity Fund (QOF) or Qualified Opportunity Zone Business (QOZB) may continue to acquire property in those zones after December 31, 2026.

The Notice clarifies an important limitation for projects in previously designated Opportunity Zones. Under the amended statute, tangible property acquired after 2026 generally must be acquired after the “applicable start date” for the relevant Opportunity Zone. Because previously designated Opportunity Zones were designated before that framework was enacted, property acquired after 2026 for use in those zones generally will not qualify as Qualified Opportunity Zone Business Property unless an exception applies.

Previously designated Puerto Rico Opportunity Zones expire on December 31, 2027. All other previously designated Opportunity Zones expire on December 31, 2028.

Transition Rules for Previously Designated Opportunity Zones

Notice 2026-40 provides two principal paths for post-2026 acquisitions in previously designated Opportunity Zones.

I. Working Capital Safe Harbor Plan

Property acquired after 2026 may continue to qualify if it is acquired under a written working capital safe harbor plan adopted on or before December 31, 2026. The plan must designate working capital assets in writing for the development of a trade or business in the QOZ, and must include a written schedule consistent with the ordinary start-up of a trade or business under which those assets are spent within 31 months of receipt. To rely on this transition rule, the QOZB must receive at least 10% of the total estimated working capital assets under the plan and expend at least 5% of those assets by December 31, 2026. Amounts required to be spent under a binding agreement entered into before January 1, 2027, may count toward the 5% requirement.

The working capital plan rule is also important for post-2026 QOF investments into QOZBs. The Notice confirms that post-2026 eligible gain may still be invested in a QOF, and provides a path for that capital to support a project in a previously designated Opportunity Zone where the QOF/QOZB investment and related property acquisitions are made pursuant to a qualifying written working capital plan. Stock or partnership interests acquired after 2026 pursuant to such a plan may be treated as acquired after the required “applicable date” for purposes of the QOZ stock and QOZ partnership interest rules.

This rule will be especially relevant for projects with multi-year development, acquisition, construction, or improvement timelines that will continue after 2026. Sponsors should confirm that the written plan, budget, schedule, funding, and contracts connect the post-2026 activity to the pre-2027 plan.

Examples

Example 1: Project with a qualifying working capital plan. A QOF forms a QOZB to develop a mixed-use project in a previously designated Opportunity Zone. Before December 31, 2026, the QOZB adopts a written master plan for commercial and residential development, receives and spends the required working capital amounts, and completes the initial phase of the project. The residential phase continues after 2026 in accordance with the original plan. In that case, post-2026 property acquisitions made in a manner substantially consistent with the plan may continue to qualify. The Notice also indicates that additional post-2026 capital may support the project where the capital is needed to complete work included in the original plan.

Example 2: Post-2026 expansion without a qualifying plan. A QOZB operates a manufacturing facility in a previously designated Opportunity Zone and, after 2026, acquires a new warehouse on adjacent land to expand capacity for a new product. The property is not in a newly designated Opportunity Zone, is not acquired under a qualifying written working capital plan, and is acquired for business expansion rather than ordinary-course replacement or modernization. In that case, the new warehouse generally will not qualify as Qualified Opportunity Zone Business Property merely because it is located in a previously designated Opportunity Zone.

II. Ordinary Course Replacement Exception

Property acquired after 2026 may qualify if it is acquired in the ordinary course of business to replace or modernize existing tangible business property. The Notice indicates that this can include replacement or modernization needed to continue current operations. Examples include apartment unit renovations when tenants vacate (window replacements, appliances, fixtures, cabinetry, and flooring) and restaurant kitchen modernization (new ventilation systems for energy efficiency and updated point-of-sale systems). It does not extend to property acquired for business expansion or a move into a new line of business.

The Notice also provides relief for certain compliance tests after the designation period for a previously designated Opportunity Zone expires. Specifically, qualifying property acquired before expiration, or under one of the transition rules, may continue to treat the expired zone as an Opportunity Zone for purposes of both (i) the “substantially all use” requirement of the QOZBP definition under § 1400Z-2(d)(2)(D)(i)(III), and (ii) the QOZB gross income and intangible property tests under § 1400Z-2(d)(3)(A)(ii). This relief extends through December 31, 2047.

Planning Considerations

Projects in previously designated Opportunity Zones should be reviewed for planned post-2026 acquisitions and capital contributions. Particular attention should be given to whether a working capital safe harbor plan should be adopted or updated before December 31, 2026, whether the 10% funding and 5% expenditure thresholds can be met, and whether any post-2026 work is properly characterized as ordinary-course replacement or modernization rather than expansion.

Bottom Line

While Notice 2026-40 is not final regulation, it is expected to form the basis for forthcoming proposed regulations. Opportunity Zone projects that expect to acquire property after 2026 in previously designated Opportunity Zones should treat the Notice as a planning priority and document their plans, commitments, expenditures, and business purpose before the end of 2026. Those with upcoming Opportunity Zone projects should consider project timing and the need for a working capital plan, if located in a previously designated Opportunity Zone.

Winthrop & Weinstine will continue to monitor Opportunity Zone guidance as it is released. For more information, please contact the attorneys mentioned within this alert or your regular Winthrop attorney.

[1] Notice 2026-40 also addresses several investor-level transition rules that are not the primary focus of this alert. Among other items, the Notice provides that taxpayers holding qualifying QOF investments through December 31, 2026 generally must include remaining deferred gain at that time, but may remain eligible for the 10-year basis step-up election on a later sale if the applicable requirements are satisfied. The Notice also provides that this deemed included gain cannot itself be re-deferred. Separately, eligible gain realized on or before December 31, 2026 may still be deferred if timely invested in a QOF after December 31, 2026, and post-2026 QOF investments are generally subject to the amended five-year gain inclusion rule and related basis step-up rules.

On June 1, 2026, the Northern District of Illinois materially altered its prior ruling on the Illinois Interchange Fee Prohibition Act (IFPA), preventing the law’s interchange fee restrictions from applying to key participants in the payment system. See our prior Client Alert on this case. This decision follows intervening regulatory action by the Office of the Comptroller of the Currency (OCC) and comes as the IFPA’s effective date remains in flux.

The Court reaffirmed its initial preemption determination for the IFPA’s prohibition on collecting interchange fees on sales taxes, excise taxes, and gratuities (where merchants provide the relevant data). Now, the Court has blocked enforcement of the IFPA as to national banks, federal savings associations, and out-of-state state-chartered banks, as well as payment card networks such as Visa and Mastercard. Payment card networks were excluded from the preliminary injunction.

After the Court upheld the IFPA’s interchange prohibitions against all financial institutions in February (relying on the fact that payment card networks not the financial institutions, set the interchange fees), the plaintiffs appealed the decision to the Seventh Circuit. The case was briefed and scheduled for a May hearing before the Seventh Circuit; however, the Seventh Circuit remanded the case back to the lower court in light of the OCC’s recent regulatory action.

The Court’s reversal stems from the OCC’s April 2026 interim final rule, which expanded national banks’ authority to receive non-interest fees indirectly through intermediaries, including payment card networks. The Court found that, in light of this regulatory change, the IFPA now “significantly interferes” with national banks’ exercise of their federally authorized powers, thereby triggering federal preemption under the National Bank Act. The Court concluded that the IFPA would require a restructuring of how interchange fees are assessed and collected, imposing an undue burden on bank operations and the broader payments ecosystem.

In extending relief to payment card networks, the Court recognized that effective preemption must reach entities that are integral to the exercise of national banks’ powers, including those that set interchange rates on behalf of issuing banks. As a result, the interchange fee restrictions are effectively inoperative for the majority of large financial institutions and core payment system participants.

The Court did not disturb its earlier holding with respect to entities not covered by federal banking preemption. Accordingly, federal credit unions, Illinois-chartered banks, and other non-bank actors remain subject to the interchange fee restrictions, leaving a fragmented compliance framework for those card issuers still within the scope of the statute.

With respect to the Data Usage Limitation, the Court reaffirmed its prior decision in full, continuing to hold that the provision is preempted and invalid as applied to national banks, federal savings associations, federal credit unions, out-of-state banks, and other participants (including processors and networks) to the extent they facilitate those entities’ operations. The Court again emphasized that federal law provides broad authority for financial institutions to process and use transaction data, and that the IFPA’s restrictions directly conflict with those powers.

Procedurally, the Court also addressed the OCC’s separate interim order purporting to preempt the IFPA, concluding that while the agency’s position is entitled to consideration, it is not dispositive and does not displace the Court’s independent obligation to resolve the preemption question. The Court ultimately found the OCC’s rulemaking—rather than its adjudicatory order—to be the more relevant development affecting the outcome.

Separately, the Illinois legislature has passed a bill that, if signed, would delay the IFPA’s effective date to July 1, 2027, further clouding the timing and ultimate implementation of the law.

In practice, most major card issuers and payment networks are no longer subject to the IFPA. Credit unions and Illinois-chartered banks, however, must still comply and may face operational challenges without a uniform industry-wide process.

Winthrop will continue to monitor developments, including any appeal to the Seventh Circuit and further federal regulatory action.

Background

The Minnesota Pollution Control Agency (MPCA) recently released its draft cumulative impact analysis rules for air permits, and explained the rules in a webinar (recording to be released later). The cumulative impacts analysis requirement was enacted in 2023, and is a new requirement applying to both new and reissued air permits. The process involves significant community engagement and extensive evaluation of potential environmental and community impacts associated with the air emissions source. See Minnesota Statute Section 116.065. The draft rules will be open for public comments for much of the summer before the public hearing in September. The final rules are not expected until the end of the year or early 2027.

Under the statute, any facility located within one mile of an environmental justice (EJ) area and in the seven-county metro, Duluth, or Rochester may have to complete a cumulative impacts analysis. For facilities in those areas, applicants will need to provide an initial assessment of the potential impacts with sufficient information for MPCA to determine if a full cumulative impacts analysis is required. As MPCA explained, the process starts broadly by requiring that air permit applications for stationary sources in the seven-county metro, Duluth, and Rochester contain the newly required initial assessment. That group of applications is then narrowed down to applications for projects that “may” have a “substantial impact,” and then further narrowed to applications for projects that would have a “substantial adverse impact.”

MPCA’s comments during the webinar and the newly released rules provide definitions and details for key terms and concepts.

Key Details from the Draft Rules

• Benchmarks: A cumulative impacts analysis is mandatory if the application meets or exceeds one of the benchmarks established in the new rules.
  • New construction – Any permit application that includes new construction will be required to complete a cumulative impacts analysis.
  • Facility expansions – A cumulative impacts analysis will be required if the expansion has an emission rate for a pollutant above a certain threshold.
  • Permit reissuance – Any facility that has had a local, state, or federal enforcement action in the three years prior to filing the application will have to conduct a cumulative impacts analysis.
• Substantial Impact: The cumulative impacts analysis is also mandatory if MPCA determines the stationary source “may” have a “substantial impact.” Whether the impact is substantial depends on the extent of the impact, especially in the context of other environmental stressors, whether the impact can be controlled, and, if so, what mitigation measures are in place either through control technology or other regulatory oversight.
• Initial Assessment: At the outset of the permitting process, applicants are now being asked to include an initial assessment of the potential environmental and community impacts, which will help MPCA determine whether the applicant will need to complete the cumulative impacts analysis. The details on the content for the initial assessment are outlined in the new rules. Each initial assessment will also be posted on MPCA’s website.
• Cumulative Impacts Analysis: If MPCA determines that the permit action “may” have a “substantial impact,” the next step is for the applicant to complete a cumulative impacts analysis to evaluate whether the permit action will have a “substantial adverse impact.” To that end, the cumulative impacts analysis is required to include information about the current conditions of the site, air modeling data, and an air risk analysis for human health risks. The protocols for the air modeling and the risk assessment will need to be approved by MPCA, and the approval process is outlined in the new rules.
• Community Benefits Agreement: A community benefits agreement is required under the statute when MPCA determines that the activities proposed in a permit application will result in a “substantial adverse impact,” a term now defined in the new rules. MPCA is required to conclude there is a substantial adverse impact based on:
  • Air modeling – If the results show that the stationary source’s emissions would be equal to or greater than 50 percent of any ambient air standard;
  • Air risk analysis – If the assessment includes exceedances of the acceptable risk levels, which include, for example, risk levels for cancer, inhalation, farmer, and urban gardener; or
  • Cumulative impacts analysis – If MPCA identifies a substantial adverse impact to the environment or health of the EJ area residents based on the contents of the cumulative impacts analysis.
• Public Involvement: One of the statute’s broad aims was to increase public involvement in the permitting process, which it accomplished through several mechanisms including public comment periods, public meetings, and community benefits agreements. The new rules provide additional details on the public involvement, including requiring applicants to submit public participation plans and specifying the information applicants are required to include in each public meeting presentation.

What Happens Next

• The initial comment period on the rules is open until July 17 at 4:30 pm.
• There will be a hearing on the rules on September 1 at 3 pm.
• Additional public comments will be accepted after the hearing from September 1 until September 21 at 4:30 pm.
• Rebuttal comments will be accepted until September 28 at 4:30 pm.

We recommend that companies seek legal advice when determining the applicability of the cumulative impacts analysis requirement or when evaluating participation in the public comment process. If you’d like to learn more about the cumulative impacts analysis requirement, please feel free to reach out to any member of our Environmental team.

The Securities and Exchange Commission (SEC) has proposed two significant rule packages that public companies, newly public companies, and companies considering public capital markets should all keep tabs on:

1. The first proposal, Registered Offering Reform would make registered offerings faster, more flexible, and more available to smaller public companies.
2. The second proposal, Enhancement of Emerging Growth Company Accommodations and Simplification of Filer Status for Reporting Companies would simplify public-company filer status and extend scaled disclosure accommodations to a much larger group of issuers.

The SEC describes the purpose of these proposals as part of a broader effort to make public markets more attractive for companies and investors, primarily by making initial public offerings less onerous and ongoing securities law compliance more manageable.

Registered Offering Reform: Better Shelves, More Financing Flexibility

The registered-offering proposal, if adopted, would significantly expand access to Form S-3, the short-form registration statement public companies use for shelf offerings and other follow-on offerings. A shelf registration statement allows companies to put registered shares “on the shelf” so the registered shares can be publicly offered at a later date without needing a separate registration statement. This permits an issuer to register securities now and sell them later, when market conditions are better or capital needs are more urgent. For companies using at-the-market offering programs, or “ATMs,” shelf registration can be particularly useful because it enables the issuer to sell securities into the market over time, rather than in one large fixed-price slug.

The SEC’s proposal would make several major changes to the existing shelf registration system. If adopted, the proposal would eliminate both the current 12-month Exchange Act reporting history requirement for Form S-3 eligibility and the $75 million public float requirement that currently limits unrestricted primary offerings on Form S-3. Issuers would still need to be current and timely in their Exchange Act reports, and certain ineligible issuers would remain excluded, but the proposal would remove the transaction requirements that currently force smaller public companies into the “baby shelf” framework.

As things currently stand, an issuer with less than $75 million in public float may use Form S-3, but can generally only sell up to one-third of its public float over a rolling 12-month period. If the proposed rule is adopted, that cap is eliminated, meaning that eligible smaller public companies could have far more usable shelf capacity and much more flexibility to raise capital through registered offerings, including ATM programs.

However, it is worth noting that the proposal does not contemplate eliminating all limits on capital raising. Issuers would still be required to comply with federal securities laws and exchange rules. For example, NASDAQ-listed issuers would still need to consider NASDAQ’s shareholder approval rules, including the 20% rule. Still, the baby shelf capital raise throttle would go away.

WKSI-Style Benefits for More Issuers

In addition to providing for more flexible financing, the proposal also expands the availability of benefits now enjoyed by only large-cap issuers, or “well-known seasoned issuers,” (“WKSIs”) to certain issuers falling below this threshold. At present, WKSI status is reserved for companies with at least $700 million of public float or at least $1 billion of registered non-convertible securities issued over a three-year period.

The most important benefit of being a WKSI is the ability to use automatic shelf registration. Under the current regime, WKSIs may file a shelf registration statement that becomes effective immediately upon filing. In other words, WKSIs do not need to wait for SEC review, and can instead file a shelf registration and immediately put new securities out for offer.

The SEC proposal would expand access to automatic shelf registration. Instead of limiting automatic registration to issuers with a certain public float or dollar amount of securities issued, issuers would be bucketed between Form S-3 eligible issuers with less than 12 months of Exchange Act reporting history, and those with more than 12 months of history. Put simply, WKSI-style shelf registration would be expanded — as long as an issuer’s reporting history is clean and has been in place for over a year, that issuer can use automatic shelf registration.

The proposal also pushes other WKSI-style benefits down-market. In addition to the benefits of automatic shelves, smaller issuers would also be able to take advantage of pay-as-you-go filing fees, broad shelf flexibility, and enhanced offering-communication rules.

Blue Sky Preemption Expansion

One change that will likely impact many market participants is the significant expansion of federal preemption of state ‘blue sky’ registration and qualification requirements. Under current law, many registered offerings involving exchange-listed securities are already treated as “covered securities” and are therefore exempt from state securities registration.

Under the proposal, the SEC would define “qualified purchaser” under the Securities Act so broadly that any person offered or sold securities in a registered Securities Act offering would be treated as a qualified purchaser for purposes of federal preemption. As a result, securities sold in registered offerings would become “covered securities,” substantially preempting state registration and qualification review even for many offerings that are not currently federally preempted.

This proposal could be particularly impactful for non-traded REITs, BDCs, and other offering structures that currently require separate state-specific securities registration and qualification compliance notwithstanding SEC registration. Today, those offerings can be subject to multiple layers of blue sky review, including separate state filings, which stacks filing fees. Practically, this proposal would substantially reduce the need for separate state securities registration for many offerings that currently still face blue sky disclosure requirements.

We anticipate that this part of the proposal may draw significant resistance from state securities regulators and NASAA because state registration and qualification review for these types of registered offerings is one of the few areas where state review still plays a meaningful role. Whether this portion of the SEC’s proposal will survive the comment period remains to be seen.

Filer Status Reform: Fewer Categories, Right-Sized Disclosure

While the SEC’s first proposal would make it easier for public companies to conduct offerings, the filer-status proposal is about making it less expensive and less burdensome to remain public. Today, the public-company reporting framework is divided among several overlapping categories, including: (i) large accelerated filers; (ii) accelerated filers; (iii) non-accelerated filers; (iv) smaller reporting companies; and (v) emerging growth companies.

The SEC proposal would simplify that framework and move toward two principal categories: (i) large accelerated filers, which would remain subject to the full public-company reporting regime; and (ii) non-accelerated filers, which would receive scaled disclosure and other accommodations. The practical effect of this change would be to move many public companies into the lighter reporting category.

The proposal would also eliminate certain public-company disclosure obligations for many issuers. Most companies that would otherwise be treated as non-accelerated filers under the proposed framework would no longer be required to include, among other things, say-on-pay and say-on-frequency proposals in their proxy statements.

IPO Process Reform May Be Next

Separate from these proposals, the SEC is also inviting comments on modernizing the initial public offering process. On May 26, SEC Chairman Atkins identified the Securities Act “gun-jumping” rules as an area for possible reform, stating that the current framework is difficult to navigate and is out of date given new communication technologies.

Public comments on these IPO-process issues are requested by July 27, 2026.

What Public Companies Should Do Now

While the proposals discussed above are not final, companies, particularly issuers, and contemplated issuers, should begin evaluating how these proposals could affect their capital markets and reporting plans. Companies with shelf registration statements should confirm when their current shelf offering expires, whether they are subject to baby shelf limitations, and evaluate how their capital-raising activities would change under the proposed rules.

Newly public companies should pay particular attention. Earlier Form S-3 eligibility, expanded Form S-1 incorporation by reference, potential access to automatic shelf registration after seasoning, and a longer scaled-disclosure runway could all affect capital planning during the first several years after going public.

Bottom Line

The SEC’s registered-offering proposal could make shelf registration and ATM programs significantly more useful for smaller public companies, and the  filer-status proposal would reduce ongoing public-company overhead for many issuers by raising the threshold for large accelerated filer status and expanding scaled disclosure accommodations.

Winthrop & Weinstine’s Securities & Corporate Finance team is continuing to monitor these proposals. For more information, please contact your regular Winthrop attorney or a member of our Securities & Corporate Finance team.

NOTICE: This client alert is a periodic publication of Winthrop & Weinstine, P.A., and should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general information purposes only, and you are urged to consult legal counsel concerning your situation and any specific legal questions. This may be considered advertising material.

The Landscape Has Shifted — And Split

In a previous client alert, we reported on United States v. Heppner, No. 25 Cr. 503 (S.D.N.Y. Feb. 17, 2026), in which Judge Jed S. Rakoff of the Southern District of New York ruled that a criminal defendant’s communications with Anthropic’s Claude AI platform were not protected by either the attorney-client privilege or the work product doctrine. That decision reverberated through the legal community, suggesting that any use of a publicly available AI tool to analyze legal issues by a client could destroy privilege protections entirely.

One week earlier, however, a federal court in the Eastern District of Michigan reached the opposite conclusion. In Warner v. Gilbarco, Inc., No. 2:24-cv-12333 (E.D. Mich. Feb. 10, 2026), Magistrate Judge Anthony P. Patti denied a motion to compel production of a plaintiff’s AI-assisted litigation materials, holding that the use of ChatGPT did not waive work product protection. Judge Patti reasoned that “ChatGPT (and other generative AI programs) are tools, not persons, even if they may have administrators somewhere in the background,” (emphasis in original) and that work product waiver requires disclosure “to an adversary or in a way likely to get in an adversary’s hand.”

The Key Conflict

The two orders rest on fundamentally different analytical frameworks:

In Heppner, Judge Rakoff found that sharing information with Claude destroyed confidentiality for a number of reasons. While the court discussed the fact that Anthropic’s privacy policy permits data collection, use for training purposes, and disclosure to third parties—including “governmental regulatory authorities”—this was far from the sole reason the court found that neither the attorney-client privilege, nor work product protection, applied to protect the defendant’s use of AI to assist with his legal defense strategy. In addition to reasoning that no “reasonable expectation of confidentiality” could exist when a platform’s terms expressly reserve the right to disclose user inputs, the court further emphasized that all recognized privileges require “a trusting human relationship” with “a licensed professional who owes fiduciary duties and is subject to discipline”—a relationship that cannot exist between a user and an AI platform. (internal citation omitted)

In Warner, Judge Patti took the view that the work product doctrine protects a litigant’s “internal analysis and mental impressions—i.e., her thought process,” and that treating AI use as a waiver “would nullify work-product protection in nearly every modern drafting environment, a result no court has endorsed.” The court characterized the defendant’s pursuit of AI-related discovery as “a fishing expedition” and “a distraction from the merits of this case.”

Important Distinctions

While the holdings appear squarely contradictory, several factual distinctions bear noting. In Heppner, the defendant used Claude independently, without direction from counsel, to develop defense strategy—and the court found this critical, noting that had counsel directed the AI use, “Claude might arguably be said to have functioned in a manner akin to a highly trained professional who may act as a lawyer’s agent within the protection of the attorney-client privilege.” In Warner, the plaintiff used ChatGPT as a drafting and analytical tool in connection with active litigation, and the court treated this use as analogous to any other software-assisted work product preparation. Additionally, Heppner involved a claim of attorney-client privilege over client-to-AI communications, while Warner focused specifically on the work product doctrine—which historically carries a higher waiver threshold.

What This Means for Our Clients

Until appellate courts resolve these different outcomes, businesses and individuals face genuine uncertainty about whether AI-assisted legal analysis will be protected from discovery. The safest course is to assume the more restrictive Heppner framework could apply in any jurisdiction.

Practical Steps to Protect Privilege

We recommend that clients implement the following measures immediately:

• Do not use publicly available AI tools to analyze legal questions or develop legal strategy without express direction from counsel. The Heppner court strongly suggested that attorney-directed AI use might receive privilege protection, but independent client use will not. Any legal analysis by a client should be conducted at the direction of counsel or through enterprise AI platforms with appropriate confidentiality safeguards. However, even then, this may not protect the AI-generated output from discovery.
• Audit and disable AI transcription and recording features during calls with your attorneys. Many conferencing platforms (Zoom, Teams, Google Meet) now include AI-assisted transcription, summarization, and note-taking features that may transmit privileged communications to third-party servers. Under the Heppner rationale, any transmission of privileged content to a third-party platform with broad data-use policies could constitute waiver. Therefore, the safest route is to avoid using these tools entirely during calls where privileged information will be exchanged.
• Review AI platform terms of service and privacy policies before inputting any sensitive business or legal information. The Heppner court relied heavily on Anthropic’s privacy policy—specifically its provisions allowing data collection, training use, and third-party disclosure—to find that no reasonable expectation of confidentiality existed. Where enterprise agreements with AI platforms provide contractual commitments against using user inputs for AI training and third-party sharing, the privilege calculus may differ.
• Establish clear internal policies governing employee use of AI in connection with any matter that is the subject of litigation, investigation, or legal consultation. Document that any AI use for legal purposes must only occur at the direction of and under the supervision of counsel, so as to potentially bring such use within the agency framework recognized in Heppner.
• Maintain AI use within privileged workflows by routing all legal AI queries through counsel’s own systems. If attorneys direct the use of AI tools as part of their own work-product preparation—rather than clients using AI independently—the resulting materials are far more likely to retain both privilege and work product protection under either court’s framework.

Looking Ahead

These conflicting orders underscore that the law governing AI and privilege is in its infancy and demonstrates that courts are still developing frameworks for evaluating AI-assisted legal work. Neither decision is binding beyond its own district, and appellate guidance may take years to materialize. Until then, organizations should assume that at least some courts may treat AI platform disclosures as privilege-waiving communications. In the interim, the prudent approach is to treat AI interactions involving legal and confidential subject matter with the same caution one would apply to any communication with an unretained third-party. We will continue to monitor developments in this rapidly evolving area and provide updates as additional courts weigh in.

For questions about how these rulings may affect your organization’s AI policies, litigation strategy, or internal protocols, please contact any member of Winthrop’s Business & Commercial Litigation team.

The post-Cantero battle over state mortgage escrow-interest laws continues to deepen, with significant implications for national banks’ mortgage servicing practices, pricing flexibility, and exposure to consumer class actions. The Second Circuit recently reaffirmed its prior holding that New York’s escrow-interest law is preempted, and the OCC issued new rulemaking designed to bolster preemption defenses and affect national uniformity.

On May 5, 2026, the U.S. Court of Appeals for the Second Circuit issued a significant decision in Cantero v. Bank of America, N.A., holding for a second time that federal banking law preempts New York’s statute requiring lenders to pay interest on mortgage escrow accounts. The Second Circuit’s decision creates a circuit split with the Ninth Circuit’s decision in Kivett v. Flagstar Bank, FSB and the First Circuit’s decision in Conti v. Citizens Bank, N.A, which respectively held that that California’s and Rhode Island’s interest-on-escrow law were not preempted. These decisions have significant implications for national banks.

In Cantero, the plaintiffs—borrowers with mortgage escrow accounts—filed punitive class actions alleging that the national bank failed to comply with New York state law, which requires lenders to pay 2% interest on certain escrow account balances. The defendant banks argued that this state law is preempted by federal banking law, which allows national banks to offer escrow accounts without requiring interest payments. Similar arguments were made by the plaintiffs and banks in Kivett and Conti.

Cantero Decision

The Cantero case has had a long, winding history up to the Supreme Court and back. In the beginning, the Cantero district court denied the bank’s motion to dismiss the class action based on the failure to pay 2% interest on escrow accounts, and the case ultimately reached the Second Circuit for a second time after prior appeals and a remand from the U.S. Supreme Court directing a more nuanced preemption analysis under its Barnett Bank precedent. Under Barnett Bank, courts must consider the nature the state law’s interference and the degree of its impact on national banking powers.  A state law is preempted if it “prevents or significantly interferes” with a national bank’s exercise of its powers, which is a situation-specific inquiry.

The Second Circuit in a 2-1 decision held on remand from the Supreme Court that New York’s interest-on-escrow requirement is preempted by federal law and reversed the district court’s decision. The majority reasoned:

• Interference. The escrow interest law directly affects a national bank’s power to make residential mortgage loans and structure and administer escrow accounts. Because escrow accounts are integral to mortgage lending, regulating their terms interferes with a recognized banking power.
• Nature of the Interference. Unlike generally applicable state laws (e.g., contract or property rules), New York’s statute specifically targets financial institutions and limits their ability to set terms of escrow accounts. The Second Circuit’s majority opinion concluded that this type of regulation resembles laws the Supreme Court has previously found preempted. Federal statutes such as RESPA regulate escrow accounts extensively but do not require banks to pay interest. The majority viewed that omission as reflecting Congress’s intent to preserve bank discretion over escrow account terms, including whether to pay interest.
• Degree of Interference. The majority emphasized that requiring a minimum interest rate increases operational costs for lenders, limits pricing flexibility, and may reduce availability of escrow accounts or mortgage lending. The majority analogized this burden to prior cases where state laws significantly impaired banking operations.

The Cantero plaintiffs filed a writ of certiorari to the U.S. Supreme Court last week asking the court to resolve the circuit split.

Practical Implications for National Banks

The Second Circuit’s majority decision limits states’ ability to impose varying escrow-interest requirements on national banks. However, the ruling is contrary to earlier decisions from the Ninth and First Circuit decisions that held California and Rhode Island state laws requiring mortgage lenders to pay interest on escrow accounts were not preempted. The resulting circuit split could make the case ripe for another appeal to the U.S. Supreme Court. Complicating this situation, however, is swift rulemaking by the Office of the Comptroller of the Currency (OCC).

OCC Rulemaking

On May 15, 2026, the OCC issued its final preemption determination, concluding that federal law preempts state laws that restrict OCC-regulated banks’ flexibility to decide whether and to what extent to (1) pay interest or other compensation on funds placed in real estate escrow accounts; or (2) assess fees in connection with such accounts. Codified in 12 C.F.R. § 34.7, the OCC promulgated a rule that federal law preempted the following state laws:

• California: Cal. Civ. Code sec. 2954.8;
• Connecticut: Conn. Gen. Stat. sec. 49-2a;
• Guam: 11 Guam Code Ann. sec. 106103;
• Maine: Me. Rev. Stat. Ann. tit. 9-B, sec. 429; Me. Rev. Stat. Ann. tit. 33, sec. 504
• Maryland: Md. Code Ann., Com. Law secs. 12-109, 12-109.2;
• Massachusetts: Mass. Gen. L. ch. 183, sec. 61;
• Minnesota: Minn. Stat. Ann. sec. 47.20, subd. 9;
• New York: N.Y. Gen. Oblig. Law sec. 5-601;
• Oregon: Or. Rev. Stat. secs. 86.245, 86.250;
• Rhode Island: 19 R.I. Gen. Laws sec. 19-9-2;
• United States Virgin Islands: V.I. Code tit. 9, sec. 67;
• Utah: Utah Code Ann. sec. 7-17-3;
• Vermont: Vt. Stat. Ann. tit. 8, sec. 10404; and
• Wisconsin: Wis. Stat. secs. 138.051, 138.052.

The OCC also issued its final Escrow Powers Rule to codify in 12 CFR Part 34 and 12 CFR Part 160 national banks’ authority to establish real estate lending escrow accounts and the flexibility to set the terms and conditions of such accounts.

The OCC’s preemption determination, which will become effective June 18, 2026, and Escrow Powers Rule, which will become effective 30 days after publication in the Federal Register, will complicate the circuit split. Although the rules are likely to bolster preemption arguments for national banks, it remains unclear how much weight courts will afford the OCC’s determinations in future litigation, particularly following the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, which overruled Chevron deference for agency decisions. As challenges to the OCC rules and underlying preemption questions continue to develop, courts may reach differing conclusions. Banks outside of the jurisdiction of the First, Second, and Ninth Circuits should conduct a nuanced analysis of their governing circuit’s case law and likely rulings based on these developments.

On May 17, the Minnesota Legislature passed H.F. 2438, the 2026 omnibus tax bill, and sent it to the governor following a late-session agreement. The bill includes a broad range of tax changes, including federal conformity updates, changes to Minnesota’s pass-through entity tax and opportunity zone treatment, selected business tax provisions, and tax administration changes.

Federal Conformity

The bill updates Minnesota’s conformity to many federal income tax changes enacted in Public Law 119-21, commonly known as the One Big Beautiful Bill Act (OBBBA). As we previously discussed in our client alert on OBBBA, the federal legislation made significant changes across a wide range of tax provisions. Minnesota conforms to many of those changes, but does not adopt every federal change for state tax purposes.

For corporations, one significant nonconformity item involves research and experimental (R&E) expenditures. The bill generally differs from OBBBA’s immediate federal expensing treatment and requires Minnesota taxpayers to add back 80% of the federal deduction for domestic R&E expenditures. That amount is then recovered by reducing Minnesota taxable income in equal amounts over the next four taxable years.

The bill also modifies Minnesota’s treatment of controlled foreign corporation (CFC) income, including net CFC tested income and subpart F income. In particular, Minnesota does not adopt OBBBA’s permanent extension of the federal look-through rule. The federal CFC look-through rule generally allows related CFCs to make certain payments to each other, such as dividends, interest, rents, and royalties, without those payments being treated as passive subpart F income, as long as the payments come from active foreign business income. These changes may be relevant for businesses with foreign subsidiaries or ownership structures involving CFCs.

H.F. 2438 also preserves Minnesota’s 50% limitation on business meal deductions despite OBBBA’s 100% deduction for certain meals. Businesses may be affected if they claim the full federal deduction for qualifying meals, including meals provided on fishing boats or food and beverages sold in certain business transactions, because the excess deduction must be added back on their Minnesota returns.

The bill also adjusts Minnesota’s individual alternative minimum tax rules to account for Minnesota’s selective conformity to OBBBA. Business owners may be affected if pass-through income, opportunity zone gains, or foreign subsidiary income is reported on their individual Minnesota returns.

Pass-Through Entity Tax

The bill extends Minnesota’s pass-through entity tax, commonly referred to as the PTET, through tax year 2027. It also revives and reenacts PTET retroactively from January 1, 2026.

PTET remains an important planning tool for partnerships, limited liability companies taxed as partnerships or S corporations, and S corporations because it preserves Minnesota’s entity-level workaround to the federal state and local tax deduction limitation, at least temporarily.

The bill also extends the related credit for pass-through entity taxes paid to another state, makes technical changes to the PTET net income calculation, and allows the commissioner to disallow an owner’s PTET credit if the entity-level tax has not been paid.

Because PTET is being revived retroactively, the bill provides estimated payment relief for tax year 2026.  No additional tax will be imposed if the first PTET estimated payment is made in full with the second estimated payment.

Opportunity Zones

The bill decouples Minnesota from federal opportunity zone gain deferral and basis benefits beginning in tax year 2027. For individuals, the bill requires an increase to Minnesota taxable income for opportunity zone capital gain income, including certain gains deferred for federal tax purposes and certain basis increases allowed under federal law. The bill creates parallel rules for corporations. It also provides rules allowing a later reduction to Minnesota taxable income for previously taxed opportunity zone gains. Those provisions are intended to prevent the same gain from being taxed twice by Minnesota—first when the gain is taxed under Minnesota’s nonconformity rules, and later when the gain is recognized for federal tax purposes.

Opportunity Zone treatment also affects Minnesota’s net investment income tax. Under the bill, a Minnesota-specific adjustment would increase net investment income for certain opportunity zone gains, while a later adjustment would reduce net investment income for opportunity zone gains Minnesota has already taxed. As a result, investors may receive federal opportunity zone benefits without receiving corresponding Minnesota benefits. Businesses, funds, and investors with existing or planned opportunity zone investments should evaluate the Minnesota tax impact separately from the federal analysis.

The federal opportunity zone program, enacted by TCJA, generally allowed taxpayers with eligible capital gains to reinvest those gains in a Qualified Opportunity Fund (QOF) and defer federal recognition of gain. For many taxpayers, that deferral lasts until the earlier of an inclusion event, such as a sale of the QOF interest, or December 31, 2026.

Minnesota did not immediately conform to the TCJA. Instead, Minnesota enacted conformity legislation in May 2019 after many 2018 returns had already been filed. To address that timing issue, Minnesota created a “special limited adjustment” under Minnesota Statutes section 290.993. In general, that rule was intended to prevent certain retroactive TCJA conformity changes from creating additional Minnesota tax or refunds for tax year 2018 unless the provision was specifically excepted.

For some 2018 opportunity zone investors, however, the rule created a timing mismatch. Although federal law allowed the gain to be deferred, Minnesota effectively treated the gain as taxable in 2018, causing a potential double taxation issue in 2026 when the federal deferral ends.

Following the enactment of H.F. 2438, for tax years beginning after December 31, 2026, Minnesota will no longer follow the federal opportunity zone provisions—neither the deferral nor the permanent exclusion for long-held investment will reduce Minnesota taxable income. The bill does prevent double taxation of gain already reported to Minnesota, but the exclusion benefit of QOF interests held ten or more years will not be available at the state level. These rules apply across individuals, corporations, pass-through entities, and composite filers. Unlike the 2018 situation, which was a byproduct of delayed conformity, this is deliberate legislative choice to depart from federal tax treatment going forward.

Other Business Provisions

For nonresident owners of pass-through entities, the bill clarifies composite return treatment for installment sale gain that is accelerated for Minnesota purposes, as well as later-year treatment for gain Minnesota has already taxed. This may be relevant in sales of partnership interests, S corporation interests, or asset of partnerships or S corporations that operated in Minnesota during the year of sale.

The bill repeals the market value exclusion for certain improvements to business property. Under prior law, qualifying improvements could be excluded from a property’s market value when calculating levy limits, debt limits, and certain state aid amounts. Going forward, those improvements will be included in the property’s assessed market value for those purposes.

H.F. 2438 also includes targeted tax increment financing changes, public finance changes, and changes to how sales tax revenue from motor vehicle repair and replacement parts is allocated, among other provisions.

Tax Administration

The bill revises the general timing rules for Minnesota tax refund claims. Under the revised rule, refund claims generally must be filed by the later of the 3 ½ year return based period or the two-year period measured from the date the tax, penalties, or interest were paid. Businesses should continue to track Minnesota refund deadlines carefully and should not assume prior timing rules apply.

What Should Businesses Do Now?

Businesses should review the H.F. 2438 in light of their entity structure, Minnesota filing profile, and current or planned transactions. Pass-through entities should revisit PTET elections and estimated payment timing. Corporations with R&E expenditures should model Minnesota treatment separately from federal treatment. Businesses and investors with opportunity zone or international tax exposure should confirm that Minnesota treatment has been separately analyzed. Because H. F. 2438 contains different elective dates for different provisions, taxpayers should avoid assuming that all changes apply at the same time.

Winthrop & Weinstine’s tax attorneys advise businesses, business owners, investors, and closely held companies on Minnesota tax planning, federal conformity issues, pass-through entity structuring, business transactions, and state and local tax matters. If you have questions about this alert or how the 2026 Minnesota omnibus tax bill may affect your business, please contact the Winthrop & Weinstine tax team.

What does the proposed SEC rule do?

On May 5, 2026, the Securities and Exchange Commission (SEC) proposed amendments to the Exchange Act reporting regime that would, for the first time in more than 50 years, allow domestic reporting companies to file interim reports on a semiannual basis instead of quarterly. Under the proposal, companies currently required to file Form 10‑Q could elect to file a single semiannual report on new Form 10‑S, covering a six-month period, in lieu of three quarterly reports each fiscal year. Companies that do not make this election would continue filing Form 10‑Q on the existing quarterly schedule.

The proposal also includes a broad suite of conforming amendments to Regulation S‑X, Regulation S‑K, and numerous SEC forms and rules, designed to align financial statement “age” requirements, Management’s Discussion and Analysis (MD&A), internal controls, safe harbors, and other disclosure obligations with the new optional semiannual framework. The SEC frames the initiative as one of “flexibility,” intended to reduce compliance burdens and give companies more latitude to determine the interim reporting frequency that best suits their circumstances, while preserving material and timely public information for investors.

Who is eligible and how would the election work?

All Exchange Act reporting companies that currently file Form 10‑Q would be eligible to elect semiannual reporting, regardless of filer status, revenues, public float, industry, or business model. The election would be company-level and indicated by a new check box on registration statements (Forms 10, S‑1, S‑3, S‑4, and S‑11) and annual reports on Form 10‑K.

Once elected, a company would generally be expected to maintain its chosen reporting frequency for a full fiscal year. An issuer that wishes to revert to quarterly reporting would do so by unmarking the semiannual reporting box on the cover page of its next Form 10‑K, and would then resume filing Form 10‑Q beginning with the first quarter of that fiscal year. The SEC is seeking comment on whether the semiannual option should be limited to specific categories of issuers, such as emerging growth companies or smaller reporting companies, and whether a pilot program or size-based thresholds would be appropriate.

What is Form 10‑S?

Form 10‑S would be the new semiannual interim report for companies that elect this option. It would require substantially the same disclosures as Form 10‑Q, but would cover a six-month period rather than a fiscal quarter.

Part I of Form 10‑S would include:

• Interim financial statements prepared in accordance with U.S. GAAP and reviewed (but not audited) by the company’s independent accountant, covering the first fiscal semiannual period and the corresponding period of the prior year.
• A requirement that the MD&A be tailored to semiannual periods
• Quantitative and qualitative disclosures about market risk
• Disclosure regarding controls and procedures, including the same certifications currently required for Form 10‑Q.

Part II would require:

• Disclosure of legal proceedings
• Material changes to risk factors (for non-smaller reporting companies)
• Unregistered sales of securities, defaults on senior securities, mine safety disclosures, and other matters currently covered by Form 10‑Q
• Companies would also be permitted to combine shareholder semiannual reports with Form 10‑S filings, provided specified conditions are met.

Filing deadlines for Form 10‑S would track those currently applicable to Form 10‑Q: 40 days after the end of the first semiannual period for large accelerated and accelerated filers, and 45 days for all other registrants.

What changes are proposed to Regulation S‑X?

The proposal includes significant amendments to the interim financial statement and “age of financial statements” framework in Regulation S‑X.

For semiannual filers, interim statements of comprehensive income and cash flows would be presented for the first fiscal semiannual period and the corresponding prior-year period, with an option to present cumulative twelve-month information. Balance sheets would be required as of the end of the first semiannual period and as of the end of the preceding fiscal year.

The proposal would also consolidate the existing “age of financial statements” rules, currently spread across Rules 3‑01 and 3‑12, into a single, streamlined rule governing the maximum age of financial statements in registration statements and proxy materials. Age requirements would be recalibrated so that semiannual filers are not forced to prepare quarterly financials solely to satisfy Securities Act or proxy statement timing requirements, ensuring that these companies can effectively access the capital markets without producing additional financial statements for “age” compliance alone.

What other conforming amendments are proposed?

The proposal includes extensive technical amendments across the SEC’s disclosure regime to insert references to Form 10‑S and semiannual periods wherever quarterly reporting is currently referenced. Key areas of conforming change include:

• Regulation S‑K and Exchange Act rules: References to Form 10‑S and semiannual periods would be added to key Regulation S‑K items, including those governing MD&A, internal controls, certifications, and exhibits, as well as Exchange Act rules governing disclosure controls, late filings, and the Rule 10b5‑1 cooling‑off period for insider trading plans.
• Securities Act registration forms: Forms S‑1, S‑3, S‑4, S‑11, F‑1, F‑3, F‑4, and F‑10 would be amended to add a semiannual reporting election check box and to require registrants incorporating by reference to describe material changes since the last Form 10‑K that have not been disclosed in a Form 10‑Q, Form 10‑S, or Form 8‑K.
• Form 8‑K, Item 2.02: The proposal would amend Item 2.02 to expressly reference completed semiannual periods, so that earnings releases for semiannual periods would be “furnished” (not “filed”) under the existing framework. Notably, the proposing release asks whether, for semiannual filers, quarterly earnings releases should instead be “filed” and subject to Section 18 liability, given the heavier investor reliance that may result from less frequent mandatory interim reports (Proposing Release, Appendix K, Form 8‑K Item 2.02).
• Other forms and rules: Forms 6‑K, 10‑K, 12b‑25, and various foreign issuer forms would be updated to include parallel references to Form 10‑S, semiannual periods, and the new reporting framework.

How would MD&A and internal control disclosures change?

The substantive requirements for MD&A and internal control reporting would remain largely the same, but would be keyed to semiannual periods where applicable.

For MD&A, semiannual filers would discuss material changes in results of operations for the most recent fiscal semiannual period compared to the corresponding prior‑year semiannual period, and would provide summary financial information for the comparison period or cross‑reference prior filings. Quarterly filers would continue their existing practice of discussing results on a quarter‑over‑quarter basis.

For internal controls, Item 308(c) of Regulation S‑K and the related Exchange Act rules would continue to require disclosure of material changes in internal control over financial reporting. For semiannual filers, however, these disclosures and the associated officer certifications would occur once per year in Form 10‑S rather than three times per year in Form 10‑Q. The SEC specifically requests comment on whether less frequent certifications could increase the risk that material misstatements or control deficiencies go undetected for longer periods.

What are the expected benefits?

The SEC identifies several potential benefits of optional semiannual reporting. The most tangible is a direct reduction in compliance costs: companies that elect semiannual reporting would prepare one interim report per year instead of three, with corresponding savings in financial statement preparation, MD&A drafting, XBRL tagging, and legal and accounting review.

Beyond direct cost savings, the SEC suggests that less frequent reporting could allow management and boards to redirect time and resources toward strategy, capital investment, and long‑term planning, and may help mitigate the “short‑termism” that some commentators associate with quarterly earnings pressure. The SEC also notes that aggregating data into six‑month periods could reduce the granularity of competitively sensitive information available to rivals, particularly where quarterly patterns reveal seasonality or business dynamics. Finally, the SEC posits that lower reporting burdens may, at the margin, make public company status more attractive and encourage some companies to pursue or maintain public listings.

How would companies likely respond?

The SEC anticipates that issuers will fall into three broad categories.

First, some companies will become semiannual reporters, electing Form 10‑S and discontinuing routine quarterly voluntary disclosures. These companies would realize the largest compliance cost savings and experience the most significant change in their public information environment, but may also need to renegotiate debt covenants, contracts, and incentive plans that currently reference quarterly reporting metrics.

Second, many companies will remain quarterly reporters, continuing to file Form 10‑Q despite the availability of the semiannual option. These companies may benefit from signaling a commitment to transparency, particularly if the market comes to view quarterly reporting as a quality signal.

Third, a number of companies may adopt a hybrid approach, electing semiannual mandatory filings on Form 10‑S while continuing to provide some voluntary quarterly disclosures such as earnings releases and conference calls. This approach would yield intermediate cost savings but would introduce complexity around the standardization, liability, and perceived reliability of voluntary versus mandatory disclosures.

The SEC notes that issuer choices will likely depend on size, complexity, growth stage, industry practices, investor base composition, contractual and regulatory obligations, capital‑raising plans, and competitive considerations.

What should companies do now?

The comment period is scheduled to expire on July 6, 2026. Companies, investors, and other market participants should consider whether and how to engage with the rulemaking process. In particular, companies should evaluate the potential impact of semiannual reporting on their existing disclosure practices, debt covenants, equity incentive plans, investor relations programs, and capital markets access.

In assessing whether to comment, consider providing data‑backed input on expected cost savings (or increased costs) if your company were to report semiannually, the practical impediments and risks associated with changing the cadence of financial reporting, and whether any alternatives to the proposed amendments would better achieve the Commission’s objectives.

Public companies should also begin evaluating how a different cadence could affect investor relations practices, financial reporting processes, and insider‑trading compliance. Given the legal, operational, and investor‑relations considerations, companies should consult experienced outside counsel when determining the best path forward. Winthrop & Weinstine’s Securities & Corporate Finance team includes attorneys with extensive experience in SEC rules and regulations, public disclosure requirements, and a wide range of capital markets transactions. We advise public and private companies on financing growth and acquisitions and on balance sheet management through tailored equity and debt offerings aligned with business needs.

If you have questions about this alert or would like to discuss the proposal and its potential impact, please contact Vince Pecora or another Winthrop securities law attorney.

Governor and Legislative Leaders Reach Agreement

Gov. Tim Walz, Senate Majority Leader Erin Murphy, House Speaker Lisa Demuth and House DFL Leader Zack Stephenson announced late Wednesday that they had reached a bipartisan supplemental budget agreement, releasing a signed spreadsheet outlining the framework of the deal. While legislative language is still being finalized, lawmakers now face a hard deadline to pass the implementing bills before adjournment at midnight Sunday. The agreement includes a $1.2 billion bonding package, $125 million in additional property tax relief, increased education funding, $75 million for county IT modernization, and a major healthcare stabilization package totaling roughly $705 million.

More on the Deal

The agreement reflects the realities of divided government, with Republicans and Democrats each securing major priorities after weeks of negotiations. Republicans highlighted a one-year, $250 million reduction in vehicle tab fees, anti-fraud reforms, and support for rural and critical access hospitals. Democrats emphasized preserving core government services, additional aid for counties and schools, and long-term healthcare funding. One unresolved issue remains the bonding bill itself, which will require bipartisan votes to pass — especially in the House — where leaders are signaling that members with local projects may be expected to support the package. Senate GOP Leader Mark Johnson did not sign the agreement, adding uncertainty as legislative leaders work to assemble final votes before Sunday’s deadline.

HCMC Funded

The largest single piece in the agreement is the state’s new funding structure for Hennepin County Medical Center. Under the deal, approximately $200 million will go to HCMC immediately, with additional funding support bringing the total package to as much as about $700 million through 2031. Rather than redirecting the expiring Hennepin County ballpark tax to support the hospital, negotiators chose to finance the package directly from the state’s general fund. The agreement also reportedly drops previously discussed transit and rail-related funding proposals, including train funding that had been part of earlier infrastructure conversations, allowing negotiators to consolidate available dollars around hospital stabilization and core budget priorities.

Tax Relief and Tab Fee Cuts

Tax relief emerged as one of the central components of the bipartisan budget agreement, with negotiators approving $125 million in expanded property tax refunds and a one-year, $250 million reduction in vehicle tab fees. Republicans framed the tab fee rollback as a direct response to voter frustration over sharply higher registration costs tied to changes approved in recent years, particularly for newer and electric vehicles. Under the agreement, tab fee rates would temporarily revert to 2022 levels without reducing transportation funding. Democrats, meanwhile, emphasized the property tax relief package as targeted assistance for homeowners and local governments facing mounting financial pressures. Together, the measures represent an attempt by both parties to address broader affordability concerns that have increasingly shaped legislative debates and local referendum outcomes across Minnesota.

House and Senate Agree on Housing Bill

The House and Senate yesterday approved a negotiated housing bill that ultimately stripped out several of the Senate’s more controversial tenant-protection proposals in order to secure final passage. Most notably, lawmakers removed manufactured home park language that would have imposed new protections for residents, including provisions viewed by opponents as a form of rent stabilization for lot rents in manufactured home communities. The final agreement also excluded a proposed amendment establishing rent control protections for senior housing, reflecting continued resistance among moderates and industry groups to statewide rent regulation policies. The decision to leave both measures out underscores how legislative leaders prioritized a narrower compromise focused on production, homelessness prevention, and financing over broader tenant-regulation reforms.

Funding remained the centerpiece of the final package. The bill includes roughly $184 million in appropriations for housing and homelessness prevention programs over the biennium, along with authorization for additional housing infrastructure bonds. Major investments include funding for rent assistance, the Housing Trust Fund, family homelessness prevention, workforce housing initiatives, and affordable rental preservation. Lawmakers also retained targeted appropriations for community stabilization efforts and infrastructure improvements, including funding connected to manufactured home parks, even as broader policy changes affecting those parks were dropped from the final agreement. Supporters framed the bill as a fiscally focused compromise aimed at maintaining affordable housing production and homelessness services amid a challenging budget environment.