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The Sting of a Thousand Cuts 不可承受之痛China Cleans Up its Act on the Environment 中国治理环境执法行动

November 20, 2017

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2017年11月

Authors 作者

Peter Corne, Office Head and Partner, Dorsey & Whitney LLP
美国德汇律师事务所上海代表处管理合伙人
Chair, Cleantech Business Group, Dorsey & Whitney LLP
美国德汇律师事务所清洁能源业务团队主席

Johnny Browaeys, Director of Corporate Services, Greenment Environment
格林曼环境技术有限公司全球营运部总监
Director of International Operations, Greenment Environment
格林曼环境技术有限公公司服务部总监

The thousand cuts ….
不可承受之痛….

On October 18, 2017, President Xi Jinping, in a three and a half hour speech to the Party Congress emphasized that building an ecological civilization is necessary for the continued development of China. He chose his words carefully:
2017年10月18日,习近平主席在中国共产党第十九次代表大会上做了长达三个半小时的报告讲话,其中,他着重强调了生态文明建设对中国可持续发展的必要性。他字斟句酌地说道:

“The damage that humanity does to nature will ultimately harm humanity itself – this is an unavoidable rule.”
“人类对大自然的伤害最终会伤及人类自身 — 这是无法抗拒的规律。”

This announcement, together with the latest in a series of central environmental inspections covering 30 provincial regions has ushered in an era in which the environment is at the forefront of enforcement action.  In a centrally-led enforcement campaign as far-reaching as anything that the government has undertaken, over 5,700 officials have been nabbed and over 30,000 companies have been penalized. The campaign was a massive coordinated effort between central inspection teams and a multiplicity of local government authorities. The government has committed to rolling out the inspections on an ongoing biennial basis, to address the ever-present risk of environmental relapse, with the next phase targeting air pollution in the Hebei-Beijing-Tianjin triangle.  
习主席的这一发言,伴随最近对30个省市地区的一系列中央环境检查,开创了环境问题立于执法行动最前沿的时代。在一次中央领导的政府深入执法行动中,逮捕了5,700多名官员,30,000多家企业受到处罚。这场行动是中央检查组与多地地方政府的一次大规模协调努力。政府已承诺以后每两年展开一次检查,解决一直存在的环保破坏风险,下一阶段目标是冀京津三角地区的空气污染。

But the campaign's impact, felt so keenly by local government officials and corporations alike, would be nowhere near as severe if not for the new tools that have been placed in the hands of the inspectors through recent legislative action.
但当地政府官员和企业均强烈感受到,如果检察人员手中没有最新立法作为新手段,这一次行动所产生的影响不会如此强烈。


A while coming….
一段时间以来….

Few people at the time fully appreciated the significance of Premier Li Keqiang's declaration of war against pollution following the 'airpocalypse' experience in Beijing several years ago.  But it set in train a series of measures that reversed the sense of helplessness and apathy that had come to be associated with environmental protection in China. The ramp-up of environmental targeting in the central government's five year plans, the issuance over the past few years of very focused environmental policy action statements – the "Air Ten", the "Water Ten" and, most recently, the “Soil Ten" – and the issuance of long-awaited laws and regulations with teeth, provided a clear sign of what was to come.  
很少有人在当时完全体会到李克强总理在北京几年前遭遇“末日空气”后对污染宣战的意义。但之后中国制定一系列措施,扭转了对环境保护的无力和冷漠。中央政府五年计划中对环境目标的加速、过去几年出台的聚焦环境政策行动的说明 — “大气十条”、“水十条”及最近的“土壤十条” — 以及出台翘首以盼的法律法规,均提供了明确的信号。

But it was the amended Environmental Law, which came into effect without huge fanfare at the beginning of 2015, that promised to change the status quo that has so long favored “growth at any cost”. It did so by providing enforcement authorities with a greatly enhanced set of enforcement tools, aimed not only at environmental infringers, but also at corporate senior managers and regulators. The most potent of these measures changed the basis of fining infringers from a 'per event' basis to a daily basis, drastically altering the "pollute vs comply" equation. Responsible senior managers could be thrown into administrative detention for up to 15 days at a time for repeated infringements by their company. And in associated rules, the career advancement of government officials was made contingent on environmental performance. To round out the key changes, freed from the pre-requisite to demonstrate some sort of loss or damage, a number of NGOs became qualified to bring environmental lawsuits.
但是,2015年初静静生效的修订后的《环境保护法》,虽然没有被大力宣传,但提出了要改变长期以来“不惜任何代价发展”的现状。通过为执法机关提供一系列有力的执法手段,不仅针对环境违法者,还针对公司高级管理人员和监管人员,《环境保护法》确实对现状有所改变。这些措施最有效地把“按每一次污染事件”处罚违法者,改为按天数计算处罚违法者,彻底改变了“污染对比合规”的天平关系。承担主要责任的高级管理人员可能由于其公司的屡次违法行为而受到最高至15天的行政拘留。并且,相关的规则中,政府官员的升职发展也视环境治理业绩而定。为完善重要变更,在无需事先证明某类损失或损害的情况下,一些非政府组织也有资格提起环境诉讼。

NGOs also drive compliance through other methods. On 13 October, the Corporate Information Transparency Index (CITI) was released at the 2017 China Green Supply Chain Forum by the Institute of Public & Environmental Affairs (IPE, China’s most reputable environmental NGO). It accorded CITI performance/scores to approximately 260 brand-name companies. Most of the multinational companies that attended the forum expressed their concern with the increasingly stringent environmental regulations and ensuing enforcement, which meant more risks and challenges for their supply chain management. Some companies shared their countermeasures and proactive actions and others admitted that they lacked both experience and resources to make their supply chain compliant.
非政府组织也通过其他方式推动合规。10月13日,公众与环境研究中心(简称“IPE”,中国最著名的非政府环保组织)在2017年中国绿色供应链论坛上公布了企业信息透明度指数。它提供了对约260家知名品牌公司的企业信息透明度指数表现/分数。大多数参加论坛的跨国企业表示对日益严格的环境法规及随后强行执法的担忧,这意味着其供应链管理上更多的风险与挑战。部分企业分享了他们的对策和积极行动,另一些企业则承认缺乏经验和资源来确保其供应链的合规。

Such changes represent a fundamental shift in environmental philosophy. Prior to the amended Environmental Law, environmental authorities focused on up-front approvals, with environmental impact assessments, and construction approvals, taking up most of their attention. Now the emphasis is on corporate operational compliance, and its responsible oversight.
这些变化代表了环境哲学的根本性变化。修订版《环境保护法》出台前,环保机构注重于事先批准、环境影响评估及建设审批,这是他们最关注的问题。如今的重点则放在企业运营合规及其责任监督方面。

The law provides tools. But without underlying unequivocal policy support, it struggles as an instrument of social change. It has become clear in a succession of policy initiatives that environmental enforcement is here to stay and indeed has taken centre stage, having been put on a par with anti-corruption as a government's priority. What we are therefore seeing is an elusive convergence of two critical factors underpinning implementation. Other contributing factors are coming together too, such as the build-up of numbers of trained staff in the environmental authorities, and the proliferation of specialist environmental tribunals within the court system.
法律提供了手段。但是,如果没有相关明确的政策支持,它将辗转于如何成为社会变革的工具。一系列政策倡议逐渐明确的是,环保执法在此扎根并成为焦点,与反腐败一起成为政府优先考虑的问题。因此,我们看到的是两个支撑实施的关键要素的艰难结合。其他促成因素也在一一呈现,例如在环保机构中组建训练有素的团队,以及在法院系统中培养专门的环境法庭。

One need not look further than the mighty packaging company Tetra Pak to understand how much local government attitudes towards development have changed. Twenty-six years ago, when Tetra Pak wanted to set up shop in southern China, the government of Foshan offered a plot on a new industrial park a few miles out of town.
没有一家公司比包装业巨头利乐公司更了解当地政府对发展所持的态度的改变。二十六年前,利乐想在华南设厂时,佛山政府在城外几英里的新工业园区提供了一块地皮。

Tetra Pak accepted, and its factory thrived. It became the dominant local packaging firm, with a 90% share in China’s beverage paper packaging market at one point. And for many years, it was Foshan’s largest taxpayer.
利乐接受了政府提供的地皮,并且工厂逐渐繁荣发展起来,成为当地最大的包装公司,一度占据中国饮料纸品包装市场90%的份额,多年来一直是佛山最大的纳税人。

But Foshan today is not what it was 30 years ago. The population has doubled and the city has spread. Tetra Pak’s once out-of-town factory is now surrounded by residential communities worried about air pollution. This summer, after years of lobbying by angry locals (and a US$100 million antitrust fine by the Chinese authorities last year), Tetra Pak shut the plant. Production, it announced, would transfer to its three other factories in Hohhot, Kunshan and Beijing.
但今日的佛山不再是30年前的佛山。人口翻番,城市扩张。利乐在城外的工厂现在被居民区所包围,而居民们十分担心空气污染。今年夏天,经过愤怒的当地居民的多年游说(并且去年中国有关部门对利乐处以了1亿美元的反垄断罚款),利乐关闭了工厂,宣布其生产将转移至利乐在呼和浩特、昆山和北京的其他三家工厂。

The enforcement wave does not distinguish between foreign and Chinese corporations. Enforcement actions have led the phone lines of the foreign commercial chambers and other professional business organizations to ring hot with calls from affected member companies, urging the chambers to organize working group sessions for members to share experiences and recommendations on how to address the “environmental wave”. As a result, corporations have started to perform their own ‘self-environmental audits’ to gain a greater level of comfort in the new environment. 
执法浪潮并不区别对待外资企业和中资企业。这些执法行动导致外国商会和其他专业商事机构的热线电话被受到执法行动影响的商会/机构成员企业打爆,要求商会为成员组织工作小组会议,分享解决“环境风波”的经验和建议。结果是,企业开始自行开展“自我环境审计”,以期更自如地应对新的环境。

Skeptics may question whether environmental compliance will retrogress as soon as the central inspectors have returned to Beijing, and localities will return to the 'growth at all costs' approach. But another law that just came into effect is designed to nip this risk in the bud. The Environmental Tax Law turns discharge fees into a type of tax, and takes monitoring and collection out of the hands of local authorities and into the hands of joint platforms set up by tax and environmental bureaus. This means that local governments will bear great risks if they continue skirting around environmental law by waiving or subsidizing the payment of discharge fees of favored local companies. The environmental equation now favors environmentally responsible companies over polluters. And private investors are recognizing the business prospects for environmental technology as a result, especially with the proliferation of carbon financing options entering the market.
有人可能会质疑,一旦中央巡视员回到北京后,环境合规是否会倒退,地方政府将回到“不惜一切代价发展”的模式。但是,刚刚生效的另一项法律则将这种风险扼杀在摇篮中。《环境税法》将排污费改为一种税费,并且,监管和征税部门由地方政府改为税务局和环保局共同设立的平台。这意味着,如果地方政府继续通过免征或补贴其青睐的当地企业应缴付的排污费来规避环境法的话,地方政府将承担巨大风险。环境天平更倾向于对环保负责的公司而不是排污者。结果就是,私人投资者正在意识到环保技术的商业前景,尤其是随着碳融资期权进入市场的扩散。


Supply chain compliance – a hard nut to crack
供应链合规 — 棘手问题

Indirect vulnerability arising from one’s own supply chain appears to be a risk that is more elusive but no less important.
来自自身供应链的间接隐患似乎是更难以捉摸但同样重要的风险。 

On September 19, Dr. Zhang Yilin, CEO of Schaeffer Group Greater China, sent a note to the Pudong and Jiading governments asking them to allow their steel wire supplier to continue operations for another three months in order to find alternative suppliers for their production, estimating that the damage arising from the shutdown of this one supplier to Schaeffer and subsequent companies in the value chain could amount to 300 billion RMB.
9月19日,舍弗勒集团大中华区首席执行官张艺林,致函浦东新区和嘉定区政府,要求允许其钢丝供应商继续运营三个月,使得它能够为其生产活动找到另一家替代供应商,这家舍弗勒的供应商以及后续企业的停工对价值链所造成的损失预计可达3000亿元人民币。

Corporations that pro-actively engage their supply chain to enhance their awareness and compliance have proven to be able to weather the environmental storm more effectively.  Other corporations have started screening their suppliers to better understand their indirect vulnerability.
积极组织供应链以提高其意识及合规性的企业,被证明能够更有效地应对环保风暴。其他企业已开始筛选其供应商,从而更好地了解他们的间接隐患。


Soil remediation - the next frontier
土壤修复 — 下一个前沿领域

Most efforts to date have been to tackle air and water discharge pollution, with the most insidious of all pollution, soil and groundwater contamination, generally placed in the 'too hard' category.  Several years ago, a leaked survey of the extent of the nation's soil contamination shone a spotlight on the problem that has been hard to shift. The central government eventually issued the "Soil Ten" policy action plan which committed to the enactment of a "Law on Soil Pollution Prevention and Control" (“Soil Law”) in due course, rectifying the fragmented state of regulation over this area.
迄今为止,大多数努力都在于解决空气和水排放污染,而所有污染中最隐蔽有害的土壤和地下水污染,一般被放入“太难解决”类别。数年前,一份泄露全国土壤污染程度的调查报告引发了人们对这一难以转变问题的关注。中央政府最终发布了“土壤十条”政策行动计划,决心在适当的时候颁布《土壤污染防治法》(简称“《土壤法》”),整顿这一领域监管的零散状态。

True to its word, a Soil Law is on track to be promulgated next year, and in advance of that, temporary rules that give authorities to test the various concepts that will be introduced by the law, have been issued. These rules, the "Measures on Soil Environmental Management for Contaminated Sites”, announced by the MEP on December 31, 2016 and in effect from July 1, 2017, mandate the sealing off or remediation of sites targeted by the government as those already at most risk of contamination.
言而有信,《土壤法》将于明年颁布,在此之前,已经有临时规则颁布,让有关部门对该法律将引入的各种概念进行测试。这些规则,即《污染地块土壤环境管理办法》,由环境保护部于2016年12月31日公布并于2017年7月1日生效,授权政府对那些已处于极大污染风险的地块进行封闭或修复。

The Remediation Rules have kicked off a process whereby 'the polluter pays' principal will gradually become entrenched in the consciousness of polluters in China. A more systematic approach to surveys and enforcement promises to help address deep concerns in the population about the quality of locally sourced food and water. As the consequences of environmental contamination become quantifiable and acknowledged by the new environmental courts, companies will begin to seek apportioning liability, which will lead to the growth of environmental insurance products and render the application of environmental technologies more attractive.
修复规则打开了一个进程,借此,“污染者付费”原则将在中国逐渐在污染者的脑海中确立。更系统化的调查及执法方式保证有助于解决人们对本地食品及水资源质量污染的深切忧虑。随着环境污染的后果变得可量化并且被新的环境法院所认识,企业将开始寻求分摊责任,这将有利于环境保险产品的发展,并使环保技术的应用更具有吸引力。


So what you should look out for to manage your risk?
因此管理你的风险须注意什么?

Companies should, in conjunction with their environmental assessors and legal counsel, audit themselves to guard against the following red flags that will be picked up in an investigatory visit by environmental officials:
企业应当与其环境评估人员及法律顾问共同进行自身审计,以防范环保官员调查访问时可能会指出的下列重要问题:

  • Absent or incomplete EHS permits
    无环境健康安全许可证或环境健康安全许可证不完备
  • Non-compliance with land use or industrial policy
    不遵守土地使用或行业政策
  • Inadequate environmental protection facilities
    环境保护设施不足
  • Hazardous waste disposal by unlicensed parties
    危险废物交由无执照方处理
  • Any soil or ground water contamination
    任何土壤或地下水污染
  • Noxious odors such as VOCs
    有毒气味,例如挥发性有机污染物
  • Outstanding fees or fines
    未缴付费或罚款
  • Disputes with neighboring residents or facilities
    与附近居民或工厂的纠纷
  • Occupational health or safety compensation issues
    职业健康或安全赔偿问题
  • Media or NGO exposure for non-compliance
    媒体或非政府机构对不合规的曝光

The rigor of the current environmental enforcement environment is highly likely to prevail.  Proactive self-assessment with periodic follow ups, combined with a strong compliance policy is the best way to both guard against nasty surprises, and to have a ready defense demonstrating that a company has robust environmental compliance policies.
当前严格的环保执法环境极有可能一直保持下去。积极的自我评估及定期追踪,结合严格的合规政策,是防范意外惊吓及展示企业拥有强大环保合规政策防御准备的最佳方式。


Conclusion
结论

China may not be able to save the world, but there is still time for China to save its own environment. And in initiating an era in which environmental enforcement is the ‘new normal’, China will be making a massive contribution to improving ecosystems far beyond its own borders in the years to come. Western companies will in the main weather the inconvenience, and emerge from the initial investigatory shock in a stronger market position. As playing fields are leveled through the increase in costs to polluters, and as other areas of problematic enforcement, such as IP protection, are addressed, compliant Western companies will be better placed to compete on their own terms, and to prosper.
中国可能不能拯救世界,但中国仍有时间拯救自己的环境。启动环保执法成为“新常态”的时代,中国将为未来几年直至本国边境以外的生态系统改良作出巨大的贡献。西方企业基本上将经历这些风雨打击,从初始调查冲击中恢复过来后,会有更强大的市场地位。随着污染者成本的提高,竞技平台日趋公平,同时其他领域问题执法(如知识产权保护)得到解决,合规的西方企业将能更好地以自身条件竞争,获得成功。

 


About Dorsey & Whitney LLP 
关于美国德汇律师事务所

Clients have relied on Dorsey since 1912 as a valued business partner. With locations across the United States and in Canada, Europe and the Asia-Pacific region, Dorsey provides an integrated, proactive approach to its clients' legal and business needs. Dorsey represents a number of the world's most successful companies from a wide range of industries, including leaders in the banking, energy, food and agribusiness, health care, mining and natural resources, and public-private project development sectors, as well as major non-profit and government entities. 
1912年以来,美国德汇律师事务所一直是客户信赖的重要业务合作伙伴。德汇凭借其遍及美国、加拿大、欧洲和亚太地区的分布网点,为客户的各类法律及商业需求提供一体化、积极的解决方案。德汇服务于众多全球知名成功企业,涉及行业广泛,包括银行、能源、食品与农业、医疗保健、矿业与自然资源、公私合作项目开发领域以及主流的非盈利组织与政府机构。


About GREENMENT ENVIRONMENT 
关于格林曼环境

GREENMENT ENVIRONMENT is the largest and fastest growing independent Chinese environmental consultancy operating in accordance with international standards.  GREENMENT's leadership is made up of environmental pioneers who have been supporting foreign companies entering China since the 1990's.  GREENMENT today helps the same foreign companies and their supply chains to keep up with fast changing environmental regulations and engages with site operators to create self-motivated compliance through enhanced environmental awareness.  Greenment's clients, when they open, close and move their operations, ask Greenment's help with environmental permitting, soil and groundwater cleanup and environmental compliance.  At the same time, GREENMENT serves foreign and Chinese clients outside of China through a network of local partners, currently covering 31 countries.
格林曼环境是一家依据国际标准经营的中国最大及最快速发展的独立环境咨询公司。格林曼的管理团队由环保领域的领先专家组成,一向为1990年代以来进入中国的外资企业提供支持服务。格林曼如今助力相同的外资企业及其供应链跟上快速变化的环保法规,协同实地人员,通过增强环保意识,实现积极主动的合规。格林曼的客户,无论开业、闭业还是转移经营,均寻求格林曼帮助其环保许可、土壤及地下水净化及环保合规。与此同时,格林曼通过各地合作伙伴网络,为中国境外的外国及中资客户提供服务,目前覆盖至31个

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Dorsey Partner Melissa Raphan Elected a Fellow of the College of Labor & Employment Lawyers

International law firm Dorsey & Whitney LLP is pleased to announce that Partner Melissa Raphan has been elected a Fellow of the College of Labor & Employment Lawyers (CLEL) as part of its 2026 class. “Melissa’s election to this prestigious fellowship comes as no surprise to those of us who have had the privilege of working with her,” says Peter Nelson, Dorsey’s Managing Partner.  “She is an exceptional employment lawyer, a trusted advisor, and a leader whose impact extends far beyond her matters. Clients rely on her deep knowledge, strategic counsel, and ability to navigate complex workplace disputes and sensitive employment matters with both confidence and compassion. She has helped shape our firm, strengthen our profession, and opened doors for countless others through her commitment to mentorship and diversity. We are incredibly proud of her accomplishments and delighted to see her receive this recognition.” CLEL is a nonprofit professional association that honors the nation’s leading attorneys in the field of labor and employment law. Originally established to recognize excellence in the profession, CLEL has evolved into a respected intellectual and practical resource for the legal community and its many audiences. Its mission centers on recognizing individuals who have made significant contributions to the field, fostering the exchange of knowledge and delivering value to academia, government, the judiciary, and the broader public. Election as a fellow represents the highest level of peer acknowledgment, reflecting sustained achievement, integrity, and a commitment to advancing the profession. Melissa’s career reflects CLEL’s mission. She has been recognized both regionally and nationally for her advocacy, leadership, and achievements both inside and outside of the courtroom. Her employment litigation experience spans class actions, collective actions, and high-stakes individual disputes in state and federal courts, as well as arbitration forums including the American Arbitration Association and the Financial Industry Regulatory Authority (FINRA). She is also a trusted advisor on a full range of workplace issues, from hiring and performance management to sensitive terminations and organizational change. She brings decades of experience representing clients across the financial services, healthcare, food and agriculture, and energy sectors. Melissa will be formally inducted during CLEL’s installation ceremony held in conjunction with the American Bar Association’s Labor & Employment Law Conference in Washington, D.C., on November 7.

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Patent Partners Al Araiza and Lena Petrovic Join Dorsey in Palo Alto

Patent partners Al Araiza and Lena Petrovic have joined Dorsey & Whitney LLP in Palo Alto, the international law firm announced today. Al Araiza works with clients to develop and implement patent strategies that align with corporate objectives, supporting growth initiatives, financing efforts, and successful exits, including initial public offerings and acquisitions. He advises on building, managing, and optimizing patent portfolios across a broad range of emerging and frontier technologies, with depth in wireless communications, artificial intelligence, and energy innovation. Before practicing law, Al gained engineering experience in the defense industry, working on energy system modeling and communications circuitry design. He also conducted biomedical research, with findings published in peer-reviewed journals. He has been recognized in the IAM Patent 1000 for his work advising clients on patent strategy and portfolio development. Al received his J.D. from Duke University School of Law, his M.E. in Biomedical Engineering from Tulane University, and his B.S. in Electrical Engineering from UCLA. Lena Petrovic works across the software and hardware industries to develop clear, well-supported patent applications. She guides clients through the prosecution process and advises on global trademark and copyright matters, including licensing and portfolio management. Lena regularly supports clients developing technologies such as artificial intelligence and machine learning, fintech, cryptography, interactive and immersive experiences, and digital media, and works with companies in entertainment, gaming, and sports. Before practicing law, Lena spent a decade at Pixar, where she contributed to major films including The Incredibles, Ratatouille, WALL‑E, and Brave. Lena received her J.D. from Santa Clara University School of Law, her M.S. in Computer Science from Princeton University, and her B.S. from California Institute of Technology. “Al and Lena bring a practical, technical, and business-focused approach informed by extensive experience working with technology companies, startups, and investors,” said Gina Cornelio, Patent Practice Group Co-Leader. “We are thrilled to welcome them to the Patent team and our growing Palo Alto office.” “Dorsey’s Patent practice is dedicated to understanding each client's business deeply, tailoring patent strategies that directly advance their goals,” said Al Araiza. “We are proud to join this outstanding team and look forward to driving success for our clients.”

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Proposed CMS Rule Ramps Up Potential Medicare Fraud Administrative Remedies

On July 6, 2026, the Centers for Medicare & Medicaid Services (“CMS”) proposed a rule that would expand its administrative remedies to combat potential fraud. The proposed rule is the latest in a round of administrative actions that signal CMS’s intent to aggressively pursue allegations of Medicare and Medicaid fraud and heighten the risk of fraud enforcement against even well-intentioned Medicare and Medicaid providers and suppliers. The proposed rule includes several changes to regulations that govern Medicare billing privileges. Providers and suppliers should be aware that these changes dramatically expand the flexibility afforded to CMS in enrollment and revocation actions, potentially leading to harsh consequences for ministerial and administrative errors. If finalized, moreover, the proposed rule could have material implications for providers and suppliers facing threatened revocation, including heightened risk of overpayment liability and increased hurdles to challenging revocations and denials of enrollment. Added Flexibility to Existing Revocation Grounds CMS has proposed to remove a number of factors that the regulations list as relevant to a determination of whether a provider has engaged in “abuse of billing privileges.” While acknowledging that the inclusion of these factors in the regulations was permissive (requiring consideration only where “as appropriate or applicable”), CMS stated that it must be afforded “the maximum flexibility to address all possible . . . scenarios without the rigid constraints of our existing factors.” CMS provided little guidance as to the outer bounds of what conduct could constitute an “abuse of privileges” that merits revocation of Medicare billing privileges. Instead, CMS noted that a “pattern of practice” of abuse of billing privileges might be established “by a simple finding that several of a provider’s claims do not meet Medicare requirements.” Similarly, CMS has proposed to expand the regulatory provision that permits revocation of enrollment if a provider certifies as “true” false or misleading information in Medicare enrollment application or renewal forms to include any scenario in which a provider submits “false or misleading information on or associated with any CMS Medicare enrollment-related form,” including materials submitted to Medicare contractors. CMS stated that it interprets this expanded rule to include anything related to Medicare enrollment, and not only those submissions that are “intended to gain or maintain Medicare enrollment.” If finalized, the proposed rule would add significant flexibility to CMS’s ability to pursue revocation of a provider’s enrollment. While CMS has assured providers that it would “invoke [the revised regulations]. . . only when legitimately warranted under the facts and circumstances and not as a matter of course,” such expanded flexibility threatens unpredictability in the event of even administrative or ministerial errors in submissions and claims. These changes would, moreover, make it more difficult for providers to challenge a revocation action. Expanded Revocation Grounds In addition to adding flexibility to existing grounds for revocation, CMS’s proposed rule adds to and expands CMS’s already broad authority to revoke provider and supplier enrollment. Such proposed changes include adding the following grounds for revocation: Denial of Enrollment Application. Where CMS could previously revoke a provider’s other enrollments if one enrollment is revoked, CMS would also be able to revoke a provider’s existing enrollments if an application for enrollment submitted by the provider is denied. High-Risk Enrollments. CMS would be able to revoke enrollment if it determines the provider or supplier (including owning/managing employees or organizations) poses a high risk of fraud, waste, or abuse due to “. . . an affiliation under [42 C.F.R.] § 424.519” or “the provider’s or supplier’s location within a limited geographic area that has an excessive number of providers and suppliers.” Certain Misdemeanor Convictions. CMS would be able to revoke enrollment if a provider or supplier—or its owners, managing employees, managing organizations, officers, or directors—are convicted of a “misdemeanor related to sexual assault or financial misconduct within the past 10 years that CMS deems detrimental to the best interests of the Medicare program and its beneficiaries.” Ownership Changes (HHA, Hospice, DMEPOS). CMS would have broad authority to revoke enrollment of home health agencies, hospices, and DMEPOS suppliers who do not comply with the regulations governing provider changes of ownership. These proposed, expanded grounds for revocation are notably broad, and CMS provides only limited guidance as to what conduct might result in revocation under these grounds. As with the proposed expansion of existing grounds for revocation, the open-ended nature of these proposed grounds for revocation may make it more difficult for providers and suppliers to challenge revocation actions. Expanded Grounds to Deny Medicare Enrollment As with revocations, CMS proposes to expand the grounds under which a provider’s application to enroll in Medicare can be denied. These expanded and additional grounds include many of the grounds added for revocations, but also include: Medicare Debt or Payment Suspension. CMS proposes expanding the ground to deny enrollment based on Medicare debt or payment suspension to include a provider or supplier’s “managing employee, managing organization, or individual or entity with any other form of business or financial relationship with the provider or supplier[.]” Significantly, this expansive definition (called an “associated party” under the proposed regulation) currently contains no material limitations, meaning almost any person or entity with whom an applicant does business could create denial liability. Sharing Locations with Denied/Revoked Providers or Suppliers. CMS would have authority to deny applications where a “provider’s or supplier’s practice location is in the same suite or office as another provider or supplier whose Medicare enrollment has been revoked or denied.” Hospices with Distant Medical Directors or Administrators. CMS would have discretion to deny hospice applications if the hospice’s medical director or administrator serves “multiple other hospices” or practices/is located “at such a distance (for example, in a different state) from the enrolling hospice that the medical director cannot realistically perform all medical director functions,” with a similar provision for administrators. In addition, CMS proposes applications denied for “other program termination or suspension,” may be applied to the provider or supplier in its own name or NPI or that of its owners, managing employees, or managing organization regardless of whether any appeals are pending. Retroactive Revocation CMS proposed to restructure and expand the regulatory grounds for retroactive revocation of billing privileges. Currently, Medicare regulations provide that revocations are, by default, prospective in nature: effective 30 days after CMS or the CMS contractor mails notice to the provider. Under certain circumstances, the regulations provide for revocations to be retroactive, such as when a provider is convicted of a felony, the date a professional license is suspended, revoked, or surrendered, or when a provider submits a false certification in their enrollment application. CMS has proposed to reframe the rule so as to default to retroactive revocation of billing privileges. CMS expressed concern that providers may collect payment from Medicare while remaining so non-compliant with enrollment requirements as to merit revocation. To address this concern, CMS proposed that all revocations be retroactive to the date of determined non-compliance.[1] As a result, providers suspected of misconduct or non-compliance are likely to face claims of retroactive overpayments in addition to the immediate concern no longer receiving Medicare payments while their enrollment is revoked. Reapplication Bar CMS’s proposed rule expands the grounds from which a provider may be prohibited from seeking reapplication as a Medicare provider. Under current regulations, CMS may prohibit prospective providers from enrolling in Medicare for up to 10 years if its enrollment application is denied because the applicant submitted false or misleading information in its application. Under the proposed rule, CMS will have the discretion to prohibit a provider from enrolling in Medicare if their enrollment application is denied for any reason. Conclusion As a part of the federal government’s increasingly aggressive push to combat real or perceived healthcare fraud, the proposed rule both broadens CMS’s authority to revoke and deny Medicare enrollment and raises the stakes for revocation and denial. What the proposed rule does not share is how CMS plans to exercise this expanded discretion: as a result, the proposed rule, if enacted, increases the unpredictability and potential ramifications of even technical noncompliance with CMS rules. As a result, Medicare providers should keep a close eye on potential revisions to these rules and their potential implementation and consider proactively evaluating their compliance under CMS standards. [1] In the proposed rule, CMS identifies, with respect to each ground for revocation, what it will consider to be the effective date of revocation.

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The Long-Awaited Public Infrastructure Financing Solution for Development in Arizona

Every developer who has taken raw Arizona ground to a finished project knows the largest upfront cost other than the land price is almost always the cost to install the public infrastructure. Water, sewer, stormwater, streets, dry utilities, and the fiber backbone all have to be in the ground before a single lot closes or a building opens. That capital is deployed early and generates no return for years. For decades the standard workaround has been the Community Facilities District (CFD). That tool has grown materially harder to use, for reasons cited below, and House Bill 2999, signed in June 2026 and now codified as Chapter 40 of Title 48, is Arizona's response. Some Background I have spent a good part of my career on the other side of this problem. In the 1990s and early 2000s I served as general counsel of SunCor Development Company, one of Arizona's most active master-planned community developers, where we used Community Facilities Districts to finance hundreds of millions of dollars of major infrastructure across Arizona in cities such as Goodyear, Phoenix, Tempe, Litchfield Park, and Prescott Valley. For its time the CFD was an effective structure, and a great deal of what is now on the ground in those communities was financed with this tool. Unfortunately, CFDs have over time become considerably harder to use. Successive legislative amendments have layered on tax-rate ceilings, homebuyer disclosure obligations, and added procedural steps. Another drag on the use of CFDs is that formation of them runs through the municipality, where approval can turn as much on local politics as on the merits of a project. Developers now routinely are asked to absorb delay and uncertainty that a project's economics cannot support, which is a large part of why Arizona has fallen behind Colorado, Texas, and Utah in getting infrastructure financed. A better tool was needed, and Chapter 40 is it. How a SAID Improves on a CFD A State Affordability Infrastructure District (SAID) keeps what worked about the CFD: tax-exempt, property-secured, non-recourse infrastructure financing — while shedding much of what made the CFD cumbersome. Its principal advantages over a traditional CFD: Administrative formation. A SAID is formed by the Arizona Finance Authority against fixed statutory criteria, through a yes-or-no compliance review on a sixty-day clock, rather than through the discretionary approval of a city council or a board of supervisors. Insulation from municipal politics. Because formation is a state-level compliance determination, a meritorious project is far less exposed to local political headwinds than it is under the CFD process. Landowner control of the board. A SAID is governed by a board of the landowners — appointed at formation, then elected on an acreage basis. In a typical municipal CFD, the city council sits as the district board; here, the developer controls governance. Advance funding of impact fees. A SAID can use bond proceeds to advance-pay municipal development impact fees, unlike CFDs, removing one of the largest upfront cash burdens in a project. A uniform, statewide process. The criteria are the same regardless of jurisdiction, replacing the municipality-by-municipality variation that has made CFD outcomes hard to predict. Flexible boundaries. A district may include noncontiguous parcels in the same county within five miles of one another, which fits phased and multi-tract development. Capped cost and a fixed timeline. Authority fees to form a district are capped at $15,000, and a complete petition must be acted on within sixty days. The full range of bonds. A SAID may issue general obligation, special assessment, revenue, and refunding bonds, secured solely by district property and creating no obligation for any other taxpayer. What is a SAID A SAID is a special taxing district that the owners of a development form to finance public infrastructure with tax-exempt bonds: general obligation bonds, special assessment bonds, and revenue bonds. The bonds are secured only by the property inside the district and are repaid over the long term, with terms up to 30 years. They do not affect the credit of the city, the county, or the State, and they create no obligation for any taxpayer outside the district. In practical terms, a SAID lets you finance horizontal infrastructure over the life of the asset instead of writing the check at the front end. The maximum ad valorem rate securing general obligation bonds is capped by statute at $5.00 per $100 of net assessed limited property valuation, with a limited step-up to cover a debt-service shortfall. SAIDs Work for Commercial as Well as Residential Development The SAID bill drew most of its press as a housing-affordability measure, and it appears to be a strong one. It is the first Arizona district statute to let bond proceeds advance-fund municipal development impact fees, which pulls one of the largest upfront cash burdens off a homebuilder's pro forma. But the statute's eligible infrastructure categories apply with equal force to commercial, industrial, and mixed-use projects. An industrial or logistics project can finance roads, rail crossings, sidings, and grade separations. A life-sciences or technology campus can finance its water, sewer, roads, and broadband the same way a subdivision can. Read Chapter 40 as a general-purpose infrastructure finance platform, not a subdivision-only device. How Formation Works A SAID is formed administratively by the Arizona Finance Authority. The Authority reviews the petition for compliance with the statute; it is a yes-or-no review against fixed criteria, not a discretionary negotiation with a city council or a board of supervisors, and it runs on a sixty-day clock once a complete petition is filed. Formation requires the written consent of 100% of the landowners in the proposed district and an engineer's certification that public infrastructure costs will exceed $5 million. The district may include noncontiguous parcels so long as they lie in the same county and within five miles of the district's other property, which accommodates phased and multi-tract development; if any part of the district sits inside a municipality, the whole district must stay within that municipality's limits or planning area. The Authority's fees to form a district are capped at $15,000. Issuing bonds requires a district election. Governance Simplified A SAID is run by a three-member board. The initial directors are named in the petition; after that, directors are elected by the landowners on an acreage basis as ownership diversifies. Board service runs with ownership; a director must either hold fee title inside the district or be an individual designated by a fee-title owner; and corporations, partnerships, and other entities may hold that ownership, vote as owners, and designate the individual who serves. A district has no power of eminent domain and no zoning authority, and directors may not be officials or employees of the municipality in which the district sits. What a SAID Does Not Do It finances; it does not entitle. Zoning, platting, rezonings, use permits, and the specialized approvals a manufacturing or life-sciences facility may need all remain with the local jurisdiction and proceed on their own track. The financing and entitlement timelines should be coordinated with formation of the SAID, but they are separate processes. Two substantive limits are worth flagging at the planning stage. First, electric power is largely outside the tool: the statutory definition of public infrastructure does not reach power generation or transmission, and broader energy infrastructure was removed from the bill during the Senate amendments. A power-intensive user should not assume a SAID will carry its electrical load. Second, where water, sewer, or wastewater facilities fall within a regulated utility's certificated service territory, the district cannot build or own them without the utility's written consent and must convey them to the utility upon completion. Our Take For most master-planned residential work, and for a wide range of commercial and industrial development, a SAID will be the most efficient infrastructure-financing structure Arizona has offered. The right time to evaluate it is early in the acquisition and pre-development process, while the capital stack, the development agreement, and the entitlement strategy are still being set. Once the district's boundaries, general plan, and financing parameters are set, it is cumbersome at best to bring those into conformance later. Our Dorsey team has begun advising our developer clients on SAID formation on residential, commercial, and industrial projects statewide. If you would like us to assess whether a SAID fits a project you are working on, please reach out.

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Real Estate Attorney Alexis Olsen Joins Dorsey in Phoenix

Attorney Alexis Olsen has joined Dorsey & Whitney LLP as Of Counsel in the Real Estate group in Phoenix, the law firm announced today. Alexis focuses her practice on large-scale residential, mixed-use, and multi-asset development projects as well as multi-state commercial leasing transactions. She guides clients through sophisticated acquisitions, dispositions, leasing, entity structuring, investment strategies, and due diligence matters. She has structured co-investment arrangements that drive capital deployment into housing subdivisions nationwide and has represented both landlords and tenants in commercial leasing transactions involving office, retail, industrial, and specialty-use properties, including cannabis dispensaries. Alexis received her J.D. from Sandra Day O’Connor College of Law and her B.A. from the University of Arizona. Alexis comes to Dorsey from Squire Patton Boggs. “Alexis strengthens Dorsey’s real estate capabilities at a time when Phoenix remains one of the fastest-growing and most dynamic real estate markets in the country,” said Scott Jenkins, Dorsey’s Phoenix office head. “Her addition further enhances our deep bench of 12 real estate attorneys in Phoenix and reflects our continued investment in serving clients throughout Arizona and supporting their real estate transactions and objectives across the country. We are thrilled to welcome Alexis to Dorsey.” “Joining a firm with such a deep bench of experienced attorneys in the Phoenix office, especially in the Real Estate group, presents an exciting opportunity not just for my own professional growth, but for the clients we service,” said Alexis Olsen. “I look forward to building on this strong foundation, growing our national practice, and delivering top-tier service to our clients.”

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Litigation Privilege Does Not Automatically Protect Communications with Funders: The Commercial Court Clarifies the Limits of Privilege in the Context of Litigation Funding

In Uber London Ltd & Ors v Garry White & Ors; Mishcon de Reya LLP [2026] EWHC 1610 (Comm), the Commercial Court held that documents created to help a funder decide whether to invest in a claim will not ordinarily attract litigation privilege. This means that information a firm gathers while acting for a funder can later fall within the control of the claimants it goes on to represent in the same matter. Background The Claimants (a claim group of over 10,000 individual London black cab drivers and the assignee of two former minicab operators) alleged that the Defendants (three companies in the Uber group) obtained and retained their private hire operator's licence through an unlawful means conspiracy alleged to involve fraud. Because the claims were issued outside the ordinary six-year limitation period, the Claimants relied on section 32 of the Limitation Act 1980, contending they could not, with reasonable diligence, have discovered the fraud before June 2018. A preliminary issue trial was listed to determine the question of whether the Claimants discovered, or could have discovered with reasonable diligence, the alleged fraud and/or deliberate concealment only after June 2018. The Claimants were represented by Mishcon de Reya ("MdR"). However, before MdR’s engagement with the individual drivers had begun, in late 2017 it was engaged by the litigation funder Harbour to investigate the merits and value of the potential claim. During that stage, MdR corresponded extensively with Harbour and with the Licensed Taxi Drivers' Association ("LTDA"), a black cab drivers' trade association. MdR was not formally engaged by the Claimants until October 2018 onwards. Once the proceedings had started, the Defendants sought disclosure of communications exchanged between MdR and Harbour before the engagement of MdR by the Claimants (the "Harbour Communications"). This included correspondence between MdR and Harbour, communications with the LTDA, and documents held on MdR's file opened in Harbour's name in connection with the potential claim. The Claimants resisted disclosure on four grounds: (i) that the documents were not relevant; (ii) on the grounds of litigation privilege; (iii) that the documents were outside their control; and (iv) that disclosure occurring so close to trial would be disproportionate. Judgment (i) Were the Harbour Communications relevant to the preliminary issue? The Court held that the Harbour Communications were likely to contain relevant material, on two bases. First, where the Claimants or the LTDA had communicated directly with MdR, that material could shed light on individual Claimants' actual knowledge of the alleged facts. Secondly, what MdR and Harbour had discovered during their investigation could inform the question of what a Claimant could reasonably have discovered at the time (even though the Defendants accepted that MdR's knowledge could not simply be imputed to the Claimants). (ii) Were the Harbour Communications protected by litigation privilege? As set out in the classic cases of Three Rivers (No. 6) [2005] 1 AC 610 and WH Holding Ltd v E20 Stadium LLP [2018] EWCA Civ 2652, communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation are privileged when the following conditions are satisfied: Litigation must be in progress or in reasonable contemplation. The communications must have been made for the sole or dominant purpose of conducting litigation. The litigation must be adversarial, not investigative or inquisitorial. The Court rejected the Claimant’s claim to be able to withhold the Harbour Communications on the basis of litigation privilege. The Court confirmed that litigation privilege protects only communications created for the dominant purpose of conducting litigation. The Court found that Harbour had instructed MdR so that Harbour could decide whether to fund the proceedings. As such, the dominant purpose of the communications was in relation to funding, not the conduct of litigation. This was distinguished from the situation where an individual litigant who takes its own funding decision. In that situation, the decision whether to fund and the decision whether to litigate are one and the same, made by the person who will actually be the claimant, and so it forms a part of that person's conduct of their own litigation. In contrast, a third-party funder's commercial decision whether to fund someone else's claim is not necessarily part of conducting that litigation. The fact that litigation privilege can, in principle, be claimed by a non-party funder (as recognised in the case of Al Sadeq v Dechert [2024] EWCA 28) did not assist Harbour, since there was no evidence it intended to play any role in the litigation itself beyond funding it. Communications between Harbour and MdR did remain capable of attracting another kind of privilege: legal advice privilege, because of the solicitor-client relationship between Harbour and MdR. But communications with third parties such as the LTDA were not automatically protected in the same way. (iii) Were the Harbour Communications within the Claimants' control? The Court also rejected the argument that the Harbour Communications sat outside the Claimants' control because they belonged to Harbour and not the Claimants. The Court’s reasoning was that once the individual Claimant drivers became MdR's clients, MdR also owed them a duty to disclose material information. That included information that MdR had originally acquired while acting for Harbour. As held in the case of Hilton v Barker Booth & Eastwood (a firm) [2005] 1 WLR 567, a solicitor owing duties to two clients cannot simply prefer one over the other, and it was unrealistic to suppose MdR would investigate the same claims for Harbour, then represent the Claimants, while disregarding everything it had already learned. The obvious commercial expectation was that this earlier work would be used to advance the Claimants' case. MdR sought to rely on a confidentiality clause in a 2024 retainer agreement between it and RGL Management Ltd (a claims management company acting on behalf of the Claimants) to argue that it was relieved of any duty to disclose information obtained while acting for other clients. The provision stated that MdR may "have acted for persons in the same or similar sector as yours and by agreeing to the terms of this letter you agree that will have no duty to disclose to you any confidential information that we have obtained, or might in the future obtain, from acting for such persons or which is derived from any other source". The Court rejected this on several grounds. Claimants who had already become MdR's clients had an existing right to information in the Harbour Communications where it was relevant to their claims before the 2024 retainer agreement. If they were to surrender that right, it would have required their informed consent (also required under the SRA Code of Conduct). The Court found no evidence that such informed consent had been given. The terms had simply been made available to the Claimants through a portal, with no indication that Claimants understood they were giving up existing rights to relevant information. The Court found that even if the terms had been contractually binding, that would not have amounted to informed consent. In addition, the wording of the clause was not sufficiently clear to show that the Claimants had agreed to waive access to this information. (iv) Was disclosure reasonable, proportionate, and necessary at this stage? The Claimants argued that it was neither reasonable nor proportionate for disclosure to be given at such a late stage (approximately two weeks before the start of the preliminary issue trial) and that it was not necessary for the just disposal of the proceedings. The Court rejected this, but it drew a distinction between two categories of documents within the Harbour Communications: Documents bearing on the actual knowledge of the individual drivers, including communications with the LTDA, were not privileged, likely straightforward to review, and directly relevant to the preliminary issue. Their disclosure was ordered as reasonable, proportionate, and necessary. Documents reflecting only MdR's or Harbour's own assessment of the merits were of more marginal, indirect relevance and largely likely to fall under legal advice privilege. A review to isolate the smaller pool of non-privileged material in this category would be time-consuming for limited benefit, so this was excluded from the order. Key Points to Note The judgment is an important reminder of several practical points: However closely a funder is involved in evaluating a claim's merits, litigation privilege will only apply to communications where the sole or dominant purpose of the communication is the conduct of litigation, not the funder's own decision on whether to finance it. Unless that communication separately attracts legal advice privilege, it may need to be disclosed. The same considerations apply to other communications. For example, in RBS Rights Litigation [2017] 1 WLR 3539 the argument that an After the Event (ATE) policy was subject to litigation privilege was rejected on a similar basis. Whilst in this case, there was no dispute as to whether litigation was in contemplation, it is important to note that litigation privilege will not automatically apply to the investigative stages of a claim, i.e. before litigation is in contemplation. Even where litigation is reasonably contemplated, the dominant purpose test must still be satisfied. Material created primarily for fact-finding, risk assessment, or other investigative purposes will not attract litigation privilege unless those activities are actually undertaken for the dominant purpose of conducting the litigation. (See The Director of the Serious Fraud Office v Eurasian Natural Resources Corporation Ltd [2017] EWHC 1017 (QB)). When engaging a law firm, clients should ensure that they understand whether the firm has previously obtained information about their claim while acting for another party (for example, a funder or another interested party) and how that information will be handled. Any restrictions on the firm’s ability to share relevant information with the client should be explained clearly at the outset, including what information may be withheld and why. If this decision raises questions about your own funding arrangements, disclosure strategy, or privilege position, please get in touch with our Commercial Litigation team.

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37 Dorsey Attorneys Named 2026 Top Lawyers by Minnesota Monthly

Minnesota Monthly has recognized 37 Dorsey attorneys across 27 practice areas as 2026 Top Lawyers in Minnesota. Honorees are selected through a peer nomination process and a curated survey of practicing attorneys in Minnesota, who identify leading lawyers across a range of practice areas. Administrative / Regulatory Law Jennifer Coates Antitrust Law Michael Lindsay Banking & Financial Service Law Peter Nelson Copyright Law  Jeffrey Cadwell Corporate Law  Robert Hensley Robert Rosenbaum Criminal Defense: White-Collar  Beth Forsythe Edward Magarian RJ Zayed Health Care Law  Claire Topp Immigration Law  J. Mike Sevilla Insurance Law  Daniel Brown Intellectual Property and Patent Law  Stuart Hemphill International Trade Law  Jonathan Van Horn Labor and Employment Law  Edward Magarian Ryan Mick Melissa Raphan Land Use & Zoning  Jay Lindgren Marcus Mollison Litigation – Antitrust  Michael Lindsay F. Matthew Ralph Jaime Stilson Litigation – Commercial  Michael Lindsay Litigation – Construction  Eric Ruzicka Litigation – Intellectual Property  Peter Lancaster RJ Zayed Litigation – Labor Employment Benefits  Ryan Mick Melissa Raphan Litigation – Trusts and Estates  William J. Berens Theresa Bevilacqua Bridget Logstrom Koci Mass Tort Litigation / Class Actions  James K. Langdon Mergers & Acquisitions Law  Keith Ahlgren Rachel Benedict Brian Burke Morgan Helme John Jorgenson Brian Moore Robert Rosenbaum Jonathan Van Horn Bri Whiting Municipal Law Jay Lindgren Nonprofit/Charities Law Claire Topp Securities / Capital Markets Law Cam Hoang Robert Rosenbaum Securities Regulation Theresa Bevilacqua James K. Langdon Tax Law William J. Berens Trusts and Estates Jennifer Ede Bridget Logstrom Koci Sonny Miller Kiley Petty Henry

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Alaska HB 126: What Changes for Alaska Native Corporations, Proxy Filings, and Annual Reports

Alaska House Bill 126 (HB 126), sponsored by Representative Neal Foster and passed by the 34th Alaska Legislature, is now law. The bill changes which Alaska Native Corporations (ANCs) must file proxy and annual report materials with the State of Alaska, and makes it easier to reinstate certain dissolved Village Corporations. For many smaller Village Corporations, the practical result is less public disclosure. For shareholders, advisors, and the public, it means some financial information that used to be available through the State will no longer be readily obtained. This eUpdate explains what HB 126 does in plain terms, walks through the practical trade-offs, and answers common questions. 1. What HB 126 Changes The old rule Under prior law (Alaska Statutes Sec. 45.55.139), an Alaska Native Corporation had to file its annual report, proxies, and proxy statements with the Alaska Division of Banking and Securities (the Division) if it had more than $1 million in assets and 500 or more shareholders on its current rolls. A filing ANC was also required to follow the Division’s proxy rules (3 AAC 08.305 through .365), which require specific disclosures such as top 5 executive compensation, and related-party transactions. Because these filings are treated as public records, they gave non-shareholders, including the public and the press, visibility into ANC financial information that is not filed with the SEC. The new rule HB 126 changes how the 500-shareholder test is measured. Now, the asset test is removed, and the shareholder count is based on how many shareholders the corporation originally enrolled when it was formed under the Alaska Native Claims Settlement Act (ANCSA), not how many it has today. As shares have passed down through families over the decades, some Village Corporations that started with fewer than 500 shareholders now have more than 500 recordholders. Under the old current-count test, when those corporations had crossed the threshold, they had to file. Under the new original-enrollment test, they do not. Who is affected Village Corporations that originally enrolled fewer than 500 shareholders are the main beneficiaries. They no longer have to file proxy and annual report materials with the Division or follow the Division’s proxy regulations at 3 AAC 08.305 through .365. Two groups must continue to file as before: all twelve ANCSA Regional Corporations, each of which enrolled more than 500 shareholders at creation, and all Village Corporations that originally enrolled 500 or more shareholders. As reported by the Alaska Beacon, when the bill was under consideration, the Division identified 59 corporations then filing, expected at least seven village corporations to become exempt, and was reviewing roughly 30 more. 2. Practical Analysis HB 126 reduces a real compliance burden for smaller Village Corporations, which now need not spend time and money on State filings. In coming years, the exempt Village Corporations may experience benefits associated with less public disclosure and less regulation. But at the same time, less public disclosure carries trade-offs. Benchmarking will become harder Publicly-filed proxy statements and annual reports have long served as a reference set. Shareholders, corporations, advisors, and counsel use them to compare governance practices, compensation, and financial results across similarly-situated ANCs. Since fewer of these materials will be filed publicly, there will be fewer comparable documents available, which will make benchmarking and market-checking more difficult for like-sized ANCs over time. Executive compensation transparency may be reduced The Division’s proxy rules require disclosure of the compensation of ANC’s top five most highly compensated individuals (3 AAC 08.345(b)(2)), related-party transactions above $20,000 (3 AAC 08.345(b)(3)), and audited financial statements and management’s discussion and analysis (3 AAC 08.365). When a corporation is no longer required to file these disclosures publicly, it becomes harder for shareholders and others to obtain the information, to understand how compensation is set for their corporate leadership, and how it compares across corporations of similar size and complexity. Transparency may matter more as ANCs grow Some ANCs have grown into large, complex enterprises with substantial revenue and many subsidiaries, even with fewer than 500 shareholders. For an ANC with a broad and dispersed shareholder base, public materials can be an important way for shareholders and other stakeholders to understand governance, compensation, and performance across ANCs. Reduced disclosure may carry more practical weight in those settings than for a small corporation whose shareholders are closely connected to the business. The ANCSA annual report obligation continues It is important not to overstate what HB 126 does. HB 126 changes the state filing proxy requirements. It does not remove the separate obligation under ANCSA itself. That obligation comes from ANCSA at 43 U.S.C. Sec. 1625(c), which requires a Native Corporation that would otherwise be subject to the Securities Exchange Act of 1934 to prepare and transmit to its shareholders an annual report containing substantially the information a company subject to that Act would include. Similarly, ANCs that solicit proxies for an annual meeting are still required to furnish shareholders with those proxy materials under general Alaska corporate law. However, ANCs are now no longer required to transmit proxy statements to the State. ANCs’ reporting obligations to their shareholders are unaffected by HB 126. Any corporation newly exempt from state filing still owes its shareholders a detailed annual report and a proxy statement, even though that report is no longer routed through the State and made public. Reinstatement of dissolved Village Corporations Separately, HB 126 amends AS 10.06.960(k) to remove the prior deadline (previously December 31, 2020) for reinstating an involuntarily dissolved Native Village Corporation. A dissolved Village Corporation may now apply to be reinstated under AS 10.06.633(e) at any time. Reinstatement still runs through the commissioner under AS 10.06.633(e). In general, that means the ANC must apply, cure the neglect or delinquency that led to dissolution, and pay the amounts owed, and the corporation’s name must be available or be changed to one that is. Once reinstated, the corporation and its shareholders are restored to the rights, privileges, liabilities, and obligations they would have had as if the dissolution had never occurred, and corporate and shareholder actions taken during the dissolution are treated as valid. If the previously-used corporate name is no longer available, the board alone may amend the articles to adopt a new name (without the necessity for shareholder approval). 3. Frequently Asked Questions What does HB 126 do? It changes how Alaska measures the 500-shareholder test that decides which ANCs must file proxy and annual report materials with the state. It removes the asset test, and it counts shareholders based on original enrollment rather than the current rolls. It also removes the deadline for reinstating an involuntarily dissolved Native Village Corporation. Which ANCs are affected? Village Corporations that originally enrolled fewer than 500 shareholders, because they may no longer need to file with the Division. Regional Corporations and Village Corporations that originally enrolled 500 or more shareholders must continue to file as before. Does HB 126 eliminate all reporting obligations? No. It changes the state filing requirement under AS 45.55.139, but it does not remove the separate ANCSA obligation (43 U.S.C. Sec. 1625(c)) to provide shareholders with an annual report, and general corporate law still calls for a proxy statement when the ANC solicits proxies. Corporations that remain subject to state filing requirements must also continue to comply with the Division's rules. We think we are now exempt. What should our ANC board and management consider? Confirm your ANC’s original enrollment number and whether your corporation falls below the new threshold. Watch for communications from the State on this topic as they proceed with their research. If your ANC is now exempt, decide how your corporation will meet its continuing ANCSA obligation to shareholders, review proxy and annual meeting materials and timelines, and consider what to communicate to shareholders about any change in how they will receive information. It is worth documenting the basis for any exemption. What should ANC shareholders watch for? Shareholders should watch for how and when they will continue to receive annual report and proxy statement information directly from their ANC, since some material that used to be available through the State’s online website will no longer be publicly filed. If something is unclear, shareholders can ask their ANC how it intends to meet its ANCSA reporting obligations. How Dorsey Can Help HB 126 lightens the State filing load for smaller Village Corporations, but it also raises practical questions: confirming who is exempt, meeting continuing ANCSA obligations to shareholders, keeping proxy and annual meeting processes on track, and maintaining benchmarking when public materials become less available. These are exactly the kinds of judgment calls that benefit from early planning. Dorsey’s attorneys work closely with Alaska Native Corporations and related stakeholders. If you have questions about HB 126, ANC governance, proxy filings, annual reports, disclosure obligations, or shareholder communications, please contact your Dorsey attorney, including the authors of this eUpdate.

Insights

State Affordability Infrastructure Districts (SAIDs) — A Financing Tool for Taiwanese Investment in Arizona Science and Technology Parks

If you have developed a facility inside one of Taiwan's science or technology parks, you are accustomed to the one-stop-shop of government planning the park and delivering the roads, water, power, and other infrastructure before your building is even constructed. In the United States, including Arizona, land development generally does not work that way. In Arizona, the cost of infrastructure such as water, sewer, stormwater, roads, power, and the digital backbone, typically falls on the private landowner and is incurred up front before operations generate revenue to offset that cost. For a company entering the Arizona market, this is often the largest and earliest capital burden of the entire project. Arizona recently created a tool that provides a more cost-effective way for landowners and developer to finance some of that infrastructure. House Bill 2999, signed into law June 2026 and codified at Chapter 40 of Title 48 of the Arizona Revised Statutes, establishes the creation of a State Affordability Infrastructure District (SAID). How a SAID Works Landowners are now able to use a SAID to finance public infrastructure such as water, sewer, stormwater, roads, parking, lighting, communications, rail sidings and signalization, and similar improvements, through tax-exempt bonds. The bonds are repaid over up to 30 years and secured solely by the property within the SAID. No city, county, or state credit is pledged, and no obligation falls on other taxpayers, and therefore no city, county, or state approval other than from the Arizona Finance Authority (AFA). In effect, a SAID lets you spread the cost of horizontal infrastructure over the life of the asset instead of funding it entirely at the outset. And tax-exempt bonds often offer a lower interest rate than taxable or other types of financing. How a SAID is Formed A SAID is formed upon the filing of a petition with the AFA. The petition must include the finance plan, general plan, estimated costs, maximum tax rate, appraisal, bond counsel certificate, consultant list, petitioner experience, legal description, title report, and other materials. While the landowner is required to provide notice to the local governing jurisdiction, local governing jurisdiction does not have the right to approve or deny. The petition is reviewed administratively by the AFA through a standards-based process. For an inbound investor without long-standing local relationships, an objective, criteria-driven process is a meaningful advantage to the overt political process associated with other financing districts in Arizona. Formation requirements. A SAID requires consent from 100% of landowners within the proposed district; public infrastructure costs must exceed $5 million (easily met at any real scale); the district property must all be in the same county and need not be contiguous provided that noncontiguous property is located within five miles of the district's other property; and the board is initially appointed by the forming owners of the SAID district, later transitioning to election as ownership diversifies. Actual bond issuance requires an election of the SAID property owners. Ownership and corporate structure. Consent rights and board seats run with title. If you hold the Arizona land through a U.S. blocker beneath your Taiwan parent, the standard model for Taiwanese/Arizona real estate and operating investment, the U.S. property-holding entity, rather than it’s corporate parent, is the landowner of record for the district. Before formation, our Dorsey team will confirm that you have the proper corporate structure and board mechanics to be compliant.  Board composition has no citizenship or residency requirement. This is a common concern for foreign investors, and the statute answers it cleanly. Under A.R.S. § 48-7004, a director must either hold fee title to real property in the district or be an individual designated or appointed by a fee-title owner. Corporations, partnerships, and other business entities are expressly permitted to be those owners, to vote as owners, and to designate an individual to serve. There is no requirement that a director be a U.S. citizen or resident. So your U.S. property-holding entity, as landowner of record, can appoint whichever of your principals you choose, including a Taiwan-based individual, as the three-member board.  Power infrastructure limitation. The enacted definition of "public infrastructure" in A.R.S. § 48-7001 does not include electrical power generation or transmission. The reference to electrical facilities appears only as components of lighting and traffic-control systems, and the Legislature removed broader energy infrastructure from the definition during the Senate amendments. A SAID will likely not finance the high-load power infrastructure required for semiconductor fabrication, data storage, or heavy manufacturing.  Water infrastructure within a current utility CC&N. Where water, sewer, or wastewater facilities fall within a regulated utility's certificated service territory, the SAID cannot build or own them without the utility's written consent and must convey them to the utility on completion. Entitlements and zoning: The determination of entitlements, zoning, and other land use permitting, as well as construction permitting for a technology or manufacturing facilities remain with the local jurisdiction and run on a separate track. Our Dorsey team will help you coordinate the financing and entitlement timelines together. Our Dorsey team works regularly with Taiwanese and other Asia-Pacific companies entering the Arizona market. If a SAID fits your project, we can structure it for your cross-border ownership.