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.

228 Hours and Counting…

As of noon on Friday, May 8, there will be exactly 228 hours left in the 2026 Legislative Session before the required Constitutional adjournment deadline of midnight on Monday, May 18. With this deadline fast approaching, end-of-session negotiations remain focused on unresolved tax issues (including potential Hennepin County Medical Center funding and federal conformity), a deal on a capital investment infrastructure bill, fraud issues, and, to a lesser extent, supplemental budget targets. Health and Human Services is a sticking point, especially regarding conformity with new federal requirements via H.R. 1. A bonding agreement is still outstanding and will require a three-fifths vote, making a bipartisan, four-caucus agreement essential. With a 67–67 House and closely divided Senate margins, all final deals will hinge on leadership-level global agreements.

Senate Passes Gun Violence Prevention Bill on Party-Line Vote

The Senate on Monday approved a gun violence prevention package after hours of emotional debate, advancing legislation that would ban the future sale of assault-style weapons and high-capacity magazines while increasing funding for school safety and mental health programs. The measure passed 34-33 along party lines, with all DFL senators supporting the bill and all Republicans opposing it. Supporters said the legislation was driven in part by last summer’s mass shooting at Annunciation Catholic Church and School in Minneapolis, where two children were killed and many others were injured. Democrats argued the package takes a broader approach to public safety by combining firearm restrictions with investments in school security, behavioral health programs, and anonymous threat-reporting systems.

Republicans said they supported additional school safety and mental health funding but strongly objected to the gun restrictions, arguing the proposal infringes on the rights of lawful gun owners and would likely face constitutional challenges. GOP lawmakers contended the legislation would do little to prevent future acts of violence and accused Democrats of advancing a partisan agenda despite the bill’s uncertain prospects in the tied Minnesota House. During debate, several lawmakers on both sides spoke emotionally about school shootings and public safety concerns, underscoring the intensity of the issue at the Capitol.

Senate Approves Supplemental Budget Bill After Lengthy Floor Debate

On Tuesday, the Senate passed SF 4059, a wide-ranging omnibus supplemental finance bill that lawmakers described as a targeted attempt to address pressing state needs. The bill passed 35-31 after an extended floor debate that touched on education policy, workforce development, environmental regulation, labor standards, and government oversight. Senate Finance Chair John Marty, the bill’s chief author, defended the measure as a “slim” supplemental budget package focused on affordability and urgent state priorities. Supporters argued that the bill contained critical funding for workforce development programs, school funding stability, battery recycling initiatives, and additional resources for the Attorney General’s Medicaid Fraud Control Unit. Republican senators criticized the bill as an overly broad spending package that mixed unrelated policy provisions with supplemental appropriations. Senator Eric Pratt argued the legislation violated the state constitution’s single-subject requirement, calling it a “buffet bill” that added roughly $109 million in new spending.

Taxes in Limbo as Conference Dynamics Begin Without a House Bill

Organized by Department of Revenue Commissioner Paul Marquart, a joint House-Senate Tax Working Group began meeting on Wednesday as an informal conference committee despite the absence of a House tax bill. The Senate has already moved its bill out of committee, while the House remains without a vehicle, creating a compressed runway as the legislative session heads towards adjournment. The Working Group identified preliminary overlap, including several tax increment financing (TIF) provisions and roughly two dozen local option sales tax proposals that have been heard in both bodies, suggesting a baseline for eventual negotiations.

Key policy divisions between the House and Senate and the DFL and Republicans remain unresolved. House Republicans reiterated priorities around referendum-backed local option sales taxes and expanded federal conformity, while DFLers signaled continued adherence to existing statutory guardrails limiting local sales tax approvals. Hennepin County Medical Center funding also emerged as a central pressure point for inclusion in any final package. The discussion made clear that, absent a House bill, real progress is dependent on leadership-level budget agreements and the eventual convergence of tax targets.

Becoming Law

Typically, Minnesota’s Governor has three days (Sunday excluded) to sign or veto a bill passed by the legislature. If the Governor doesn’t explicitly sign or veto a bill during this time, it becomes law without his/her signature. The countdown for the three days begins after the Revisor presents the bill to the Governor.

However, this changes for bills that are passed in the last three calendar days of a session. All bills passed in the last three days of session must be acted on within 14 calendar days of adjournment (Sundays included). If a bill is not acted on during this period, the bill is considered vetoed.

Walz Highlights Policy Record and Future Priorities in Final State of the State

In his final State of the State address, Governor Tim Walz highlighted the key policy initiatives and investments that have defined his administration, with a focus on infrastructure improvements, public safety efforts, and reforms to Minnesota’s human services systems. He pointed to ongoing work to modernize Medicaid and strengthen service delivery, emphasizing the importance of making government programs more efficient and accessible. Walz framed his tenure around economic stability, support for working families, and long-term investments designed to position the state for continued growth.

Looking ahead, the governor underscored the need for continued collaboration among state leaders to address fiscal challenges and sustain recent policy gains. He called for a steady approach to budgeting and implementation, particularly as the state continues to refine oversight of major programs and adapt to evolving economic conditions. Walz closed by emphasizing continuity and shared responsibility in maintaining Minnesota’s progress beyond his time in office.

House Budget Resolution Sets Modest Spending Targets as Session Nears Final Weeks

The House Ways and Means Committee has approved a budget resolution outlining approximately $41.1 million in new spending for the 2026-27 biennium. The resolution, while not required in an even-numbered year, establishes funding targets for a range of finance bills already moving through the legislative process. Major allocations include $15.4 million for public safety, about $1.5 million for higher education, and smaller amounts for workforce development and elections, along with a proposed $2 million reduction in housing funding.

In addition, roughly $25.6 million is reserved for standalone bills that have been heard or are expected to be considered, signaling continued movement on individual policy priorities late in session. The resolution also sets limits on spending from the Workforce Development Fund and maintains key budget reserves, including $3.42 billion in the state’s reserve account. Lawmakers noted that additional budget resolutions may follow as more omnibus packages advance, with the Legislature facing a May 18 deadline to complete its work.

Senate Tax Committee Advances Omnibus Tax Bill

The Senate Tax Committee on Thursday advanced SF 5052, its omnibus tax bill for the 2026 session, setting up the chamber’s tax priorities for the final weeks of session. The package would reduce state revenues by $10.2 million in FY 2027, followed by a net increase in revenue of approximately $417 million in FY 2028–2029. While the committee has approved the measure, the Senate cannot yet take it up on the floor, as lawmakers are waiting for the House to release and pass its own tax bill. With divided control in the House, the proposal’s timing and scope remain uncertain as the legislature enters its final stretch.

The Senate package includes a mix of tax relief, new revenue measures, and policy changes. It adopts a limited approach to federal tax conformity, including bonus depreciation but excluding several other business-related provisions. The bill also creates a new social media excise tax based on subscriber levels, projected to raise significant revenue, and modifies incentives for sustainable aviation fuel production. Additional provisions establish a Department of Revenue ruling program to provide taxpayer guidance, increase funding for the homestead credit refund program, and authorize or extend dozens of local sales taxes. The bill also proposes changes to worker classification standards and extends and increases a Hennepin County sales tax to support hospital funding, among other provisions.

Pass-Through Entity Provision to Be Added on Senate Floor

During the Senate Tax Committee hearing on Thursday, Committee Chair Ann Rest said a key pass-through entity (PTE) provision—allowing certain businesses such as partnerships and S corporations to elect to pay state income taxes at the entity level rather than on individual owners’ returns—was intentionally excluded from the omnibus tax bill, SF 5052. She explained the provision will instead be offered as the first floor amendment, emphasizing that it previously received unanimous bipartisan support in committee. Rest noted that bringing it forward separately will give all senators the opportunity to vote on the policy, and she expressed hope that advancing it in this way will once again position the Senate to lead on the issue as discussions with the House move forward.

Bipartisan OIG Bill Likely to Make it to Finish Line

While there are still many issues waiting to be resolved, one of them—a bill to establish an Office of Inspector General (OIG)—passed a key committee Wednesday night and seems poised to become law. The OIG bill (S.F. 856, Sen. Gustafson / H.F. 1338, Rep. Norris) was first introduced in 2025 and passed by the full Senate in May 2025 with an overwhelming bipartisan vote of 60-7. Despite the bill advancing out of at least ten committees in the Senate, it stalled in the tied House. Throughout the 2026 legislative session, the House passed the bill through various committees, while supporters engaged in bipartisan and bicameral negotiations. Though the bill was placed on the April 29 agenda in the House Ways and Means Committee, the committee recessed for several hours while negotiations continued and it was unclear if the bill would make it out of committee that day. However, when the committee did reconvene, it was announced that a bipartisan agreement had been reached with the Senate. The bill was amended to reflect the agreement and passed out of committee. Its next stop will be the House floor. The OIG bill is considered a key component of the legislature’s attempts to address fraud in government programs.

On April 22, 2026, the Consumer Financial Protection Bureau (CFPB) took action that could reduce compliance and litigation risk for banks. The CFPB issued its final rule that amends provisions related to disparate impact, discouragement of applicants or prospective applicants, and special purpose credit programs under Regulation B, the regulation implementing the Equal Credit Opportunity Act (ECOA). The amendments clarify the compliance obligations imposed by the statute and eliminate disparate impact provisions. The final rule is effective July 21, 2026.

The final rule largely adopts the proposed rule issued in November 2025. In the CFPB’s explanation of the rulemaking, the CFPB notes that the U.S. Supreme Court (1) has not held that disparate-impact claims are available under all antidiscrimination statutes and (2) has not examined whether a disparate-impact claim is permitted under ECOA. The Supreme Court precedence only states that Age Discrimination in Employment Act authorizes disparate-impact claims and disparate-impact claims are cognizable under the Fair Housing Act. The CFPB concludes that “[the statutory] text of ECOA does not state that disparate-impact claims are cognizable under ECOA, nor does it contain effects-based language of the type that has been found in other statutes to invoke disparate-impact liability” and “[the Federal Reserve] Board’s regulations to implement [ECOA] explicitly and solely relied on [the] legislative history [of the 1976 amendments] to conclude that Congress intended for ECOA to permit an ‘effects test concept,’ i.e., disparate-impact proof of liability.”

The final rule provides that the ECOA does not authorize disparate-impact liability (effects test), further defines discouragement, and adds prohibitions and conditions for special purpose credit programs. These amendments to the definition of “discouragement” and removal of the “effects test” from the rules concerning evaluation of applications means that bank compliance under the ECOA will be viewed in a much different light.

The new rules are as follows:

• 1002.4(b) Discouragement. A creditor shall not make any oral or written statement, in advertising or otherwise, directed at applicants or prospective applicants that the creditor knows or should know would cause a reasonable person to believe that the creditor would deny, or would grant on less favorable terms, a credit application by the applicant or prospective applicant because of the applicant or prospective applicant’s prohibited basis characteristic(s). For purposes of this paragraph (b), oral or written statements are spoken or written words, or visual images such as symbols, photographs, or videos.
• 1002.6(a) General rule concerning use of information. Except as otherwise provided in the Act and this part, a creditor may consider any information obtained, so long as the information is not used to discriminate against an applicant on a prohibited basis. The Act does not provide that the “effects test” applies for determining whether there is discrimination in violation of the Act.

The CFPB amended Section 1002.15(d)(1)(ii) regarding the scope of privilege in incentives for self-testing and self-correction to remove the parenthetical “(including a prospective applicant who alleges a violation of § 1002.4(b)).”

The CFPB further revised the special purpose credit program provisions to expand the required information to include in a written plan in Section 1002.8(a)(3)(i) and to provide exceptions to the common characteristic provision in Section 1002.8(b)(2). Those exceptions are as follows:

(3) Prohibited common characteristics. A special purpose credit program described in paragraph (a)(3) of this section shall not use the race, color, national origin, or sex, or any combination thereof, of the applicant, as a common characteristic or factor in determining eligibility for the program.

(4) Otherwise prohibited bases in for-profit programs. Subject to paragraph (b)(3) of this section, a special purpose credit program described in paragraph (a)(3) of this section may require its participants to share one or more common characteristics that would otherwise be a prohibited basis only if the for-profit organization provides evidence for each participant who receives credit through the program that in the absence of the program the participant would not receive such credit as a result of those specific characteristics.

In Section 1002.8(c), the amendments to special rule concerning requests and use of information require that the special purpose credit program must satisfy the requirements for standards for program under Section 1002.8(a) and the controlling provisions under Section 1002.8(b). Prior to this amendment, the section only referenced Section 1002.8(a).

The CFPB also amended the official interpretations to Part 1002 for the following sections:

• Section 1002.2(P) Empirically Derived and Other Credit Scoring Systems
• Section 1002.4(B) General Rules related to Discouragement
• Section 1002.6(A) General Rule Concerning Use of Information
• Section 1002.8(A) Standards for Special Purpose Credit Programs
• Section 1002.8(B) Special Purpose Credit Program Controlling Provisions
• Section 1002.8(C) Special Rule Concerning Requests and Use of Information

Banks should review these amendments and official interpretations and make any necessary changes to their compliance policies, procedures, and fair lending plans before the compliance deadline. We expect that these changes will reduce the regulatory burden and litigation risk exposure that banks have historically faced with respect to disparate impact claims. However, we caution banks that a future administration could take a different stance on disparate impact and perform a lookback during an exam or enforcement despite the changes to the regulation. Winthrop’s regulatory attorneys can help you discuss compliance strategies and recommend any changes.

The reporting deadline under Amara’s Law, Minnesota Statute Section 116.943, has been delayed again. Now, initial reports on per- and polyfluoroalkyl substances (PFAS) in products distributed or sold in Minnesota are due on September 15, 2026.

Amara’s Law addresses the use of PFAS in consumer products. It has two primary functions: banning certain PFAS-containing products and gathering information about the prevalence of such products distributed or sold in Minnesota. Beginning January 1, 2025, eleven types of products were banned from sale or distribution if they contained intentionally added PFAS, and beginning January 1, 2032, the ban expands to any products with intentionally added PFAS. The law also allows the Minnesota Pollution Control Agency (MPCA) to gather information about PFAS usage through a new reporting requirement. Manufacturers are required to submit an initial report to the MPCA listing their products offered for sale, sold or distributed in Minnesota that contain intentionally added PFAS. The initial report must include: a description of the product, the reason PFAS was used in the product, the name of the PFAS chemical used and its concentration as well as contact information for the manufacturer.

The deadline for the initial report has been delayed once before to allow the MPCA to finalize the reporting software, PRISM. Since then, the MPCA has finalized PRISM and published guidance for the initial report (available here). Currently, eighteen companies have submitted initial reports and many of those are accessible on PRISM (searchable here).

In certain circumstances and for a fee, manufacturers can request an extension of the September deadline.

Winthrop and Weinstine is closely following the development of the PFAS rulemaking. For more information, please feel free to reach out to any member of our Environmental team.

Hospital Funding May Be a Key to Session-Ending Deal

Hospital funding may be a key component to any end of session deal. There has been significant debate this session regarding stabilizing Hennepin County Medical Center (HCMC) and the state’s financially vulnerable rural hospitals, with proposals aimed at both immediate relief and longer-term sustainability. For HCMC, lawmakers have debated a targeted state appropriation to keep the doors open for another year (which could also include funding for financially strapped hospitals around the state) and longer-term help via an expanded local funding authority. While these are both options that would provide some relief, most acknowledge that these fixes don’t address the causes of the financial crisis, including low Medicaid reimbursement rates and increasing numbers of patients without insurance. Regardless, it is likely that the legislative session won’t end without help for HCMC, and targeted help for other financially vulnerable hospitals may be included as well.

Why is Hospital Funding an Issue?

Hennepin County Medical Center (HCMC) and rural hospitals across Minnesota are facing intensifying financial pressure driven by a fundamental mismatch between the cost of care and how hospitals are paid. As a safety-net provider, HCMC serves a disproportionately high share of patients covered by Medicaid, Medicare, or no insurance at all—groups that typically reimburse below the actual cost of care. At the same time, policy changes and coverage losses are increasing the number of uninsured patients, leaving hospitals to absorb more uncompensated care. Rural hospitals face similar reimbursement challenges but are further constrained by low patient volumes, workforce shortages, and limited access to higher-margin specialty services that could offset losses. Rising labor and supply costs have only widened these gaps, leaving many facilities operating on thin or negative margins.

Compounding these structural issues is growing uncertainty around federal healthcare funding. Recent actions to delay or withhold Medicaid payments, along with longer-term federal policy changes expected to reduce Medicaid spending, are putting additional strain on hospital finances. Even when funding is not directly cut, reductions in coverage lead to fewer insured patients and more unpaid care, effectively diminishing federal support. The result is a steady erosion of financial stability: hospitals are projecting significant long-term losses, some have already reduced services, and a number are at risk of closure without intervention. For both urban safety-net systems like HCMC and rural providers, the current environment reflects not a single shock but an accumulating set of pressures that threaten access to care across the state.

Endgame Uncertainty at the Capitol: Structure, Not Just Substance

This year’s legislative endgame is being shaped as much by structure as by policy and finance differences. The Senate has advanced a full slate of omnibus policy and finance bills, while the evenly split House has moved far fewer, leaving the two chambers misaligned heading into conference committee season. In past sessions, leaders synchronized their approaches early—passing parallel vehicles to streamline negotiations and floor action. That has not happened this year, meaning legislators must now reconcile not only substantive differences in policy, but also the basic question of what the final legislative “vehicles” will look like.

The key issue is whether leaders consolidate priorities into a small number of large omnibus bills or attempt to pass many narrower bills. Fewer, larger packages would be more efficient and help meet looming adjournment deadlines, but they require significant bipartisan agreement—no small feat in a 67–67 House. Alternatively, moving many smaller bills allows for more targeted consensus but creates serious time constraints.

Floor Activity Picks Up

Floor activity picked up this week as the Senate met Monday through Thursday and passed roughly 20 bills, including several omnibus policy measures. Debate varied widely—some bills drew extended, party-line votes, while others moved quickly with little opposition. The House, by contrast, convened Monday and Thursday and focused primarily on broadly supported, noncontroversial legislation, though still managing to pass more than two dozen bills. Behind the scenes, most committees have now wrapped up their regular work for the session, with only a handful still meeting. Those remaining include the Senate Finance Committee and House Ways and Means Committee, which continue to process bills, as well as the tax committees in both chambers as work intensifies toward assembling a final tax package.

Senate Passes Limits on Local Government NDAs

On Monday, as part of the Omnibus State and Local Government bill, the Senate passed new limits on the use of nondisclosure agreements (NDAs) by local governments—which proponents argue will promote greater transparency. Senators Erin Maye Quade and Bill Lieske passed amendments that would prohibit municipalities from entering into agreements that restrict public access to information about development projects, economic development initiatives, or projects involving public funding. The bill also establishes additional transparency requirements for certain large projects, including mandating public disclosures and hearings prior to approval. The Maye Quade/Lieske language would apply to local government elected officials and staff. Senator Grant Hauschild’s compromise amendment was also approved. This amendment would restrict local government elected officials from signing NDAs but exclude staff from this restriction. It is unclear if the NDA language has a path to pass through the tied House.