Welcome to Pillsbury’s Regulatory Playbook, where you’ll find news and insights on the regulatory trends that are driving markets and shaping businesses. Here, Pillsbury’s market-leading regulatory group illuminates critical developments at the intersection of law and policy. If you need to know what’s happening, why it’s happening and how to respond, consult the Playbook.
Trending Issues
Choosin’ Texas: U.S. Tax Court Bails Out “All Hat, No Cattle” Investor08.24.2026
Ella Langley laments in her break-out song that she lost her boyfriend’s affection when a big-haired, two-steppin’ Texas gal waltzed in between them. While the charms of a Dallas blonde caused Ms. Langley’s beau to choose the lone star state over Tennessee, the bloom certainly came off the yellow rose in the get-rich-quick scheme addressed in Deutsch v. Comm’r. But as we’ll see, it still pays to be a good ol’ boy because in this memorandum decision rendered on August 14, 2026, the Tax Court put a right quick end to the taxpayer’s conniption about not being able to deduct his losses. The decision is important for two reasons: (1) the loss deduction was permitted even though the court could only speculate who absconded with the money and (2) losses incurred in investment schemes remain deductible even though many other itemized deductions have been repealed.
Texas Data Center Interconnections Face New Audit Gate After Governor Abbott Directive (UPDATE)
08.24.2026
On August 3, 2026, Governor Greg Abbott directed the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to conduct a comprehensive verification and audit of data center projects advancing through ERCOT’s interconnection process before additional projects are approved to move forward. The directive states that projects failing to comply with applicable PUCT, ERCOT and state-law requirements must be denied connection to the Texas power grid.
SBA Proposes Sweeping Changes to Small Business Size Standards
08.24.2026
On August 20, 2026, the Small Business Administration (SBA) published a proposed rule that would fundamentally restructure the way the agency establishes small business size standards for federal contracting and lending programs. As described in the accompanying revised methodology white paper, the proposed rule revises the size-standard methodology for many industries across the economy, consolidates 995 size standards into 338, and shifts many industries into employee-based size standards. Comments on both the proposed rule and the revised methodology are due by September 21, 2026.
Texas Data Center Interconnections Face New Audit Gate After Governor Abbott Directive
08.18.2026
What Happened
On August 3, 2026, Governor Greg Abbott directed the Public Utility Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) to conduct a comprehensive verification and audit of data center projects advancing through ERCOT’s interconnection process before additional projects are approved to move forward. The directive states that projects failing to comply with applicable PUCT, ERCOT and state-law requirements must be denied connection to the Texas power grid.
The Strategic Case for Stakeholder Relations Ahead of the 2026 Midterm Elections
08.18.2026
With only three months to go until the 2026 midterm elections, it remains uncertain whether the House and Senate will be controlled by one political party or if control of the two chambers will be split between the parties. However, it is increasingly likely that the margins for the majority in each chamber of Congress will be narrow. This means that companies, trade associations and other organizations will be fighting tooth and nail to achieve legislative and oversight priorities that align with their interests.
Eleventh Circuit Holds S Corporation Election Is Not Property of the Bankruptcy Estate
08.18.2026
The Eleventh Circuit’s recent decision in Owoc v. The Liquidating Trustee on Behalf of the Liquidating Trust, No. 24-14048 (11th Cir. Aug. 10, 2026), highlights how tax considerations can materially affect the economics of a bankruptcy, especially where the debtor is an S corporation (S corp).
White House Issues Sweeping Executive Order Targeting Defense Supply Chains and Critical Materials
08.14.2026
On July 20, 2026, President Trump issued a sweeping Executive Order (EO) 14415 titled. “Securing America’s Defense Supply Chains and Ensuring Domestic Acquisition of Critical Materials.” In summary, the EO directs:
Trump Administration Targets Imports of Polysilicon and Derivative Products
08.13.2026
On August 6, 2026, President Trump issued Proclamation 11052 announcing the results of the Department of Commerce (Commerce) investigation under Section 232 of the Trade Expansion Act of 1962 into imports of polysilicon. The resulting action has significant implications for both the solar and semiconductor industries, covering polysilicon ingots and wafers, as well as downstream solar cells and modules. The Proclamation also foreshadows new tools that could be deployed in other future trade measures addressing supply chain risk for critical materials.
SBA Overhauls 8(a) Program’s Social Disadvantage Standard
08.13.2026
On August 11, 2026, the Small Business Administration (SBA) issued its final rule to remove the rebuttable presumption of social disadvantage for individually-owned firms. This rule significantly changes how individuals establish social disadvantage for purposes of admission into the 8(a) Business Development Program. Although the SBA received more than 100 comments on its proposed rule that was published on June 11, 2026 (discussed in our previous alert), the final rule essentially adopts the SBA’s proposed rule. This rule takes effect on September 10, 2026, and applies to all 8(a) applications pending on that date.
Commerce Department Implements Export Restrictions on Black Mass in Electrical and Electronic Waste and Tungsten Waste and Scrap
08.12.2026
On August 4, 2026, the Department of Commerce’s Bureau of Industry and Security (BIS) issued an unpublished notice, “Defense Priorities and Allocations (DPAS) Directive Allocation Order and Additional Requirements for Recoverable Critical Minerals and Materials (Directive),” requesting comments on a temporary final rule (TFR). The TFR, which implements a Presidential Determination under Title 1 of the Defense Production Act (DPA) broadly authorizing the Commerce Department to impose export restrictions on “recoverable critical minerals and materials” (CMMs). The TFR restricts, effective August 27, 2026, through August 27, 2027, the export of black mass in electrical and electronic waste (e-waste) and tungsten scrap, subject to adjustments and exceptions. This is the first allocation order restricting exports from the Department of Commerce and may foreshadow additional directives targeting other recoverable CMMs, as well as additional authorizations targeting other sectors.
“A Tisket, a Tasket”: The U.S. Tax Court Wrecks Basket Option Tax Strategy
08.10.2026
The Tax Court’s August 6, 2026, decision in SIH Partners LLLP brought back a college memory of the three guys running what seemed to be a non-stop poker game in an on-campus dorm room. How could I know then that after graduation these risk jockeys would go on to form Susquehanna International Group (SIG), probably the most successful market maker on Wall Street? In the Tax Court case, SIG (through the named taxpayer) used a basket swap (a generally accepted risk mitigation strategy) to bolster a 10x after-tax return on a portfolio of Swiss stocks. But in an exceedingly rare instance, the smartest guys in the room (and certainly my alma mater) lost on the tax benefits from the trading strategy. This article looks inside the basket to unpack the trade and how the Internal Revenue Service (IRS) prevailed over traders whose specialty is trading strategies that “push legal boundaries” to reduce tax liability.
Join the Club: Foreign Power Inverters and Advanced Robotic Devices Are Latest Categorical Prohibitions Added to FCC’s Rapidly Expanding Covered List
08.06.2026
On July 28, 2026, the Federal Communications Commission’s (FCC) Public Safety and Homeland Security Bureau issued a Public Notice further expanding the categorical location-based prohibitions of the Covered List to include (1) foreign-produced power inverters and (2) foreign-produced advanced robotic devices. The Public Notice came a day after the FCC’s receipt of two National Security Determinations that determined such equipment “poses an unacceptable risk to the national security of the United States or the security and safety of United States persons.”
“I’m a Loser, Baby”: U.S. Tax Court Shuts Down NOL Utilization Strategy
08.04.2026
On July 27, 2026, the Tax Court released its decision in HRM Holdings Company. In the decision, the Tax Court prevented a consolidated group of corporations from accessing net operating loss (NOL) carryovers incurred by a predecessor of the common parent of the affiliated group. The decision has important ramifications for loss companies developing plans for NOL utilization. Mark Leeds and Nora Burke, both tax partners in Pillsbury’s New York office, regularly work with loss corporations on the myriad limitations faced by such corporations in accessing their tax attributes. In the linked White Paper, they analyze the new decision and offer thoughts on how the disallowance could have been avoided.
Work-Related Mental Illness Is No Longer an OSHA Recordable Illness (At Least in the Fifth Circuit)
08.03.2026
As most employers know, the Occupational Safety and Health Administration (OSHA) requires employers with more than 10 employees to keep a record of occupational injuries and illnesses on OSHA’s Form 300 (Log of Work-Related Injuries and Illnesses) and Form 301 (Injury and Illness Incident Report). The Occupational Safety and Health Act requires the Secretary of Labor to “prescribe regulations requiring employers to maintain accurate records of, and to make periodic reports on, work-related deaths, injuries and illnesses …. ” 29 U.S.C. § 657(c)(2).
Caught in the Crosshairs: FCC Proposes New Restrictions on Previously Exempt Foreign Drones Deemed “Military-Grade”
07.31.2026
On July 21, 2026, the Federal Communication Commission’s (FCC) Public Safety and Homeland Security Bureau (PSHSB) and Office of Engineering and Technology (OET) issued a Public Notice seeking comment on whether to expand the scope of restrictions on certain foreign-produced unmanned aircraft systems (UAS) and UAS critical components on the Covered List (Public Notice). The Public Notice proposes to prohibit the continued importation and marketing of certain previously authorized UAS and UAS critical components that qualify as “military-grade” devices.
Regulation E-Delivery and the Proposed Shift from “Opt-In” to “Opt Out”
07.31.2026
On July 16, 2026, the U.S. Securities and Exchange Commission (SEC or the Commission) issued a proposing release for Reg E-Delivery (Reg E-Delivery), a significant modernization of the framework for the electronic delivery (e-delivery) of required information under the federal securities laws. Reg E-Delivery would establish a single framework governing e-delivery across the federal securities laws, balancing broader use of e-delivery with procedural safeguards. If adopted, Reg E-Delivery would permit issuers, broker-dealers, investment advisers, registered funds, and other market participants to satisfy many federal securities law information delivery obligations through default e-delivery without first obtaining a recipient's affirmative consent, provided specified conditions are satisfied. Recipients would retain the ability to opt out of e-delivery, request paper copies free of charge, and update their electronic contact information. Reg E-Delivery would also replace the Commission's longstanding guidance-based approach with a comprehensive regulatory framework reflecting how investors increasingly receive and retain information in an electronic environment.
California Supreme Court Confirms Policyholders May Sue Excess Insurers for Declaratory Relief and Bad Faith Prior to Exhaustion of Underlying Policies
07.30.2026
On July 27, 2026, the California Supreme Court issued a unanimous published opinion in Fox Paine & Company et al. v. Twin City Fire Insurance, et al., S287404, holding that insurance policyholders may sue excess insurers for declaratory relief and breach of the implied covenant of good faith and fair dealing (including tortious bad faith) even if all the underlying insurance coverage has not yet been exhausted. It determined: “the absence of exhaustion is not fatal to these claims.” And it reversed a published decision of the California Court of Appeal.
Indian Gaming and Prediction Markets: Bet on Litigation
07.28.2026
The rise of prediction markets has quickly become one of the most closely watched developments in the gaming industry. Companies such as Kalshi and Robinhood now offer event contracts that allow users to profit from correctly predicting the outcome of sporting events (among other real-world events). To supporters, these products are federally regulated commodity derivatives traded on a commodities exchange. To critics, they are simply sports betting platforms by another name.
Indian Gaming and Prediction Markets: On a Collision Course?
07.24.2026
Prediction markets, offered by platforms such as Kalshi and Robinhood, allow users to trade “event contracts” tied to future real-world outcomes, such as the results of sporting events and political elections, or the popularity of newly released music, movies and TV shows. Each event contract allows a user to pay between $0 and $1 to predict the answer to a yes-or-no question about a particular event—say, will the San Francisco Giants win their game against the Los Angeles Angels on Friday, July 24, 2026. As more people choose “yes,” the price of one “yes” contract rises, and the price of one “no” contract falls. When the game ends, if the Giants have won, everyone who bought a “yes” will get $1, and the “no” holders get nothing.
U.S. Bankruptcy Court Enforces New Fortress Energy’s UK Restructuring Plans, but Warns Against Abusive “COMI Tourism”
07.16.2026
On July 14, 2026, Chief Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York issued a memorandum opinion in In re NFE Global Holdings Limited, et al., Case No. 26-11268 (MG), recognizing two English Part 26A restructuring plan proceedings as foreign main proceedings under chapter 15 of the Bankruptcy Code and giving full force and effect in the United States to the English court’s sanction order and restructuring plans, including the plan releases.
The Department of Defense Abruptly Suspends Implementation of CMMC Phase II
07.15.2026
On July 13, 2026, the Department of Defense (DoD) announced that it was immediately suspending the roll out of Phase II of the Cybersecurity Maturity Model Certification (CMMC) program, set to go into effect on November 10, 2026. As we have previously reported here and here, Phase II of CMMC would have involved the roll-out of CMMC Level 2 Assessments conducted by Certified Third-Party Assessment Organizations (C3PAOs). Although DoD has suspended these third-party certification requirements, it has not suspended the enforcement of the underlying cybersecurity control requirements in contracts and subcontracts.
NRC Proposes First Major Revisions to Its Radiation Protection Framework in 35 Years
07.15.2026
On July 1, 2026, the U.S. Nuclear Regulatory Commission (NRC) published a proposed rulemaking that, if implemented, would significantly revise the agency’s radiation protection framework. The proposed rulemaking is available here. Public comments are due on the proposed rule on August 31, 2026.