Insights

On October 1, 2025, the IRS Independent Office of Appeals launched a two-year pilot program to make Post Appeals Mediation (PAM) more attractive and accessible to taxpayers. See IRS Announcement 2025-10. The new PAM pilot program offers taxpayers the opportunity to be assigned to a new Appeals team, which is otherwise unconnected to the underlying case, who will represent the original Appeals team in the mediation session. The assignment of the new Appeals team does not begin a new appeals process but rather is intended to help facilitate an expedited and impartial look at the underlying case with the goal of further exploring all potential paths to resolution prior to litigation.

This week, California Governor Newsom signed a new California pricing law that will have significant impact to companies doing business in California. The new legislation—known as AB325—will go into effect January 1, 2026 and makes it unlawful under California’s Cartwright Act to collude using a pricing algorithm and to “coerce another person to set or adopt a recommended price or commercial term” using a “common pricing algorithm.”

Last year, the California General Assembly passed the California AI Transparency Act (CAITA), which Governor Gavin Newsom signed into law on September 19, 2024, and goes into effect on January 1, 2026. This may change because this year, the same General Assembly passed AB 853, an amendment to CAITA with potentially far-reaching implications.

Marking a significant milestone toward the broad deployment of commercial drones over American skies, the Federal Aviation Administration (“FAA”) and Transportation Security Administration issued a proposed rule in August that would streamline how drones can operate when they fly beyond the visual line of sight of their operators.

On September 9, 2025, the Ninth Circuit Court of Appeals affirmed a district court’s denial of a preliminary injunction as to certain provisions of California’s Protecting Our Kids from Social Media Addiction Act. This interlocutory ruling is significant for two reasons. First, it demonstrates why and how state laws can withstand and avoid First Amendment challenges. Second, it showcases the potential difficulties in establishing associational standing on behalf of member technology and digital commerce companies.

On October 1, 2025, the Eighth Circuit decided 3M Co. v. Commissioner in the taxpayer’s favor, based on its application of Loper Bright. The question presented in the case was whether the IRS had the authority to reallocate royalty income to a U.S. parent company that its foreign subsidiary was prohibited from paying under foreign law. The court held that the best interpretation of the governing statute did not permit the IRS’s reallocation.

On September 29, 2025, California Governor Gavin Newsom signed into law Senate Bill 53, the Transparency in Frontier Artificial Intelligence Act (TFAIA). This landmark legislation represents California’s most significant regulation to date of AI developers.

On September 30, 2025, the Department of Justice (DOJ) announced that Georgia Tech Research Corporation (GTRC) agreed to pay $875,000 to settle allegations that it violated the False Claims Act (FCA) and federal common law by failing to meet cybersecurity requirements under certain Air Force and Defense Advanced Research Projects Agency (DARPA) contracts.  The settlement adds to the growing list of recoveries under DOJ’s Civil Cyber-Fraud Initiative and is yet another example of DOJ’s ongoing enforcement focus on cybersecurity obligations for federal contractors handling sensitive government information.  The settlement also provides insight into how government contractors may challenge FCA liability when faced with allegations of cybersecurity noncompliance.

After months of anticipation, the Senate has received a nomination for a Commissioner of the U.S. Consumer Product Safety Commission (CPSC). 

Yesterday, the Department of Energy (“DOE”) announced its termination of 321 grants and other awards supporting 223 energy projects.  The terminated awards were issued by the Office of Clean Energy Demonstrations, Office of Energy Efficiency and Renewable Energy, Office of Fossil Energy, the Grid Deployment Office, the Office of Manufacturing and Energy Supply Chains, and the Advanced Research Projects Agency-Energy.

On October 1, 2025, the Federal Energy Regulatory Commission (“FERC”) issued two orders inserting sunsetting provisions into 53 regulations that they described as outdated and unnecessary.[1]  FERC’s action comes in response to an Executive Order issued in the spring directing agencies to consider which of their regulations could be revoked.[2]  While there had been speculation that the list of regulations could be broader, with far-reaching implications and uncertainty to the industry, the final list addresses primarily administrative matters. 

E&E News reported that EPA will continue to operate during the shutdown relying on “carryover funds.” Carryover funds generally are unspent and unobligated funds from a previous budget period that are carried forward to cover allowable costs in a future budget period. There is no indication how long EPA’s carryover funds will allow all EPA employees to continue working versus those that are “exempted” or “excepted” personnel, meaning they can continue to work either because they are separately funded (“exempted) or must continue to work because of their position (“excepted), such as emergency responders or criminal agents.

On September 29, 2025, the U.S. Department of Commerce Bureau of Industry and Security (BIS) announced a sweeping Interim Final Rule (IFR), (the “Affiliates Rule”) expanding which entities qualify as Entity List or Military End-User entities, thereby subjecting those entities to elevated export control restrictions under the Export Administration Regulations (EAR). U.S. export restrictions applicable to entities on the Entity List, Military End-User (MEU) List, and Specially Designated Nationals and Blocked Persons (SDN List) now apply to foreign affiliates that are, in the aggregate, owned 50% or more by one or more of the aforementioned entities. An entity that becomes subject to these restrictions because of its ownership structure will be subject to the most restrictive controls that attach to any of its parent entities, regardless of ownership stakes.

The U.S. Consumer Product Safety Commission (CSPC) issued its Lapse Plan in advance of the federal government shutdown. The CSPC will furlough 35% of full-time employees, with the overwhelming majority of those retained focused on “protect[ing] life and property.” Under the Lapse Plan, consumer-oriented programs and, notably, civil penalties, will pause for the duration of any shutdown.

On September 18, EPA announced that it will prioritize Toxic Substances Control Act (“TSCA”) review for “new chemicals related to data centers and artificial intelligence (“AI”) projects,” in an effort to “streamline permitting and regulations to accelerate American data center development.”

On September 24, 2025, the California Air Resources Board (“CARB”) issued a preliminary list of reporting/covered entities under California’s climate disclosure laws SB 253 (the Climate Corporate Data Accountability Act) and SB 261 (the Climate-Related Financial Risk Act) (the “Climate Disclosure Laws”) (both as modified by SB 219).

Congress has not passed crucial funding bills for the start of Fiscal Year 2026.  If Congress fails to act by September 30, the government may be forced to shut down for lack of funding.  In anticipation of that possibility, agencies government-wide are preparing for a shutdown, and contractors and companies that work with the government should do so as well.  Our team is ready and available to help advise companies through the shutdown process.

On September 26, the White House invited the public to submit comments on Federal laws, rules, and policies that “unnecessarily hinder” the development or deployment of artificial intelligence (AI) technologies in the United States. This request marks one of the Trump Administration’s most substantial moves yet to reduce the regulatory burden on AI. Respondents may submit comments through a government website until October 27, 2025.

On September 25, 2025, the Northern District of Texas granted plaintiffs’ motion for summary judgment in Humana v. Becerra, vacating CMS’s 2023 Final Rule regarding risk adjustment data validation (RADV) audits. In the litigation, Humana challenged CMS’s decision in the Final Rule to not continue applying a Fee-for-Service (FFS) adjuster to its RADV audit methodology.