Four significant U.S. regulatory developments were filed for Federal Register publication on August 3, 2026. Until publication, the IRS, DHS, and EPA materials remain public-inspection versions; practitioners should verify final operative language and deadlines against the published editions before advising clients.

The Department of Homeland Security announced the addition of 43 entities to the Uyghur Forced Labor Prevention Act Entity List, bringing the total to 187 entities. Of the new additions:

• Four concern participation in Xinjiang government labor-transfer programs
• Forty-one concern sourcing materials from Xinjiang or associated government labor schemes
• Two companies appear on both sub-lists

The expansion materially broadens supply-chain exposure across a wide range of industries:

Goods mined, produced, or manufactured wholly or in part by listed entities are subject to the UFLPA rebuttable presumption and are generally prohibited from U.S. entry unless the importer satisfies the statutory exception and evidentiary requirements. The prohibition is not limited to transactions in which a listed company is the direct exporter or named supplier — downstream processing, tolling, and component sourcing relationships are equally within scope.

Immediate rescreening: Importers should rescreen direct and indirect suppliers, known aliases, subsidiaries, smelters, processors, and raw-material sources against the updated list. The breadth of the expansion — spanning metals, food, pharma, and electronics — means that virtually every importer with Chinese supply-chain exposure should conduct a fresh review.

Traceability documentation: For goods at risk of UFLPA detention, importers should be prepared to demonstrate, with clear and convincing evidence, that the goods were not produced using forced labor. This requires supply-chain mapping to the raw-material level, not merely first-tier supplier certifications.

Contract provisions: Purchase agreements with suppliers in or sourcing from Xinjiang-adjacent supply chains should require upstream traceability, supplier disclosure obligations, audit rights, document retention, cooperation with CBP detention proceedings, and indemnification for UFLPA-related losses including detention costs, re-exportation, and destruction.

Aluminum and construction inputs: The inclusion of aluminum and construction materials is particularly significant for Turkish companies exporting to the U.S. or sourcing from Chinese suppliers for U.S.-bound projects. Turkish aluminum producers and construction-material exporters should verify that their upstream inputs — including bauxite, alumina, and alloying metals — are not traceable to listed entities.

Treasury and the IRS proposed regulations implementing two related changes:

A. Repeal of the one-month CFC taxable-year deferral election (Section 898)

Affected specified foreign corporations may have a one-month transition taxable year. The proposal establishes rules for allocating certain foreign net-income taxes between that short year and the succeeding taxable year. It also provides elections concerning:

• Partnership-level foreign taxes
• Income-group-specific allocations
• Succeeding-year taxes
• Non-allocation in specified circumstances

The Section 898 rules are proposed to apply to taxable years of specified foreign corporations beginning after November 30, 2025.

B. 10% foreign-tax-credit disallowance for PTEP distributions

The proposal implements the statutory 10% foreign-tax-credit disallowance for foreign taxes associated with distributions of previously taxed earnings and profits (PTEP) arising from Section 951A (GILTI) inclusions after June 28, 2025.

Reliance: Taxpayers may rely on the proposal before finalization only if they apply the relevant rules completely and consistently — selective reliance is not permitted.

Comment period: Comments will be due 45 days after Federal Register publication.

CFC year-end review: U.S. companies with controlled foreign corporations should immediately review CFC year-ends to identify which entities are affected by the Section 898 transition. CFCs with November or December year-ends are most directly affected.

Foreign-tax accruals and PTEP accounts: The interaction between the transition-year tax allocation rules and existing PTEP accounts requires careful modeling. Foreign taxes accrued in the transition year may be allocated differently from taxes in the succeeding full year, affecting the effective foreign-tax-credit rate.

Section 951A distributions: Planned intercompany dividends from CFCs with GILTI-sourced PTEP may produce a partially non-creditable foreign tax cost under the new disallowance rule. The timing and structuring of such distributions should be reviewed before year-end.

Form 5471 and tax provisions: The transition-year rules will affect Form 5471 reporting for affected CFCs and may require adjustments to 2025–2026 tax provisions. Companies with calendar-year CFCs should assess whether any transition year falls within the current provision period.

Reliance election coordination: Any decision to rely on the proposed regulations before finalization must be applied consistently across the affected CFC's transition year and succeeding year. Selective application — for example, relying on favorable allocation rules in the transition year but not in the succeeding year — is not permitted.

The FCC opened a proceeding to prohibit the continued importation and marketing of previously authorized foreign-produced military-grade UAS and critical components appearing on the FCC Covered List. This is a proposal, not yet a final prohibition. Comments are due September 2, 2026.

The proposed definition extends beyond conventional military aircraft. Foreign UAS or components would be covered if they involve:

• Takeoff weights of 55 pounds or more
• Thermal-imaging or LiDAR sensors
• Drone docking stations
• Hazardous-substance dispensing capability
• Integration with defense articles
• Swarming or coordinated-flight capabilities (potentially including synchronized light-show systems)

The following would be excluded from the prohibition:

• Blue UAS-listed products
• Qualifying domestic end products
• Conditionally approved equipment
• Federal government use
• Certain commercial testing or product-development activities

Continued use of equipment already purchased would not be prohibited under the proposal.

Equipment audit: Drone manufacturers, importers, and distributors should audit their current inventory and product lines by capability, Covered List status, country of production, and component origin. The capability-based definition means that a drone not currently on the Covered List could fall within scope if it meets the weight, sensor, or capability thresholds.

Affected industries: The proposal has significant implications beyond the drone industry itself. Construction, surveying, infrastructure inspection, security, and entertainment companies that use drones operationally should assess their equipment against the proposed criteria.

Procurement and distribution agreements: Agreements should address regulatory authorization status, substitute equipment obligations, inventory return rights, supplier certification requirements, project-delay risk allocation, and white-label or OEM product identification.

Comment opportunity: The September 2 comment deadline provides an opportunity for affected industries to submit evidence on the economic impact of the proposed prohibition, the availability of compliant substitutes, and the scope of the capability-based definitions. Companies with significant exposure should consider participating in the proceeding.

Turkish drone manufacturers: Turkish UAS manufacturers and exporters to the U.S. market should assess whether their products fall within the proposed capability thresholds and Covered List criteria. The proposal's focus on foreign-produced military-grade systems, combined with the broad capability-based definition, creates uncertainty for dual-use platforms.

EPA proposed a new five-year Construction General Permit (CGP) to replace the existing permit expiring February 17, 2027. The proposed permit applies to construction activities disturbing at least one acre — or smaller projects forming part of a common development plan — in jurisdictions where EPA directly administers NPDES permitting, including:

• Massachusetts and New Hampshire
• New Mexico
• The District of Columbia
• Most Indian-country lands
• Specified federal and territorial areas

Comment period: Comments will be due 30 days after Federal Register publication.

Permit-holder identification: Construction contracts in EPA-administered jurisdictions should clearly allocate permit-holder status between owner and general contractor. The permit-holder bears primary responsibility for NOI filing, SWPPP preparation, inspection obligations, and NOT submission at project completion.

SWPPP access requirements: The proposed electronic-access requirement for SWPPP materials will require contractors to maintain accessible digital records and may affect document-management practices on multi-phase projects. Subcontract agreements should address access obligations and document-retention responsibilities.

Dewatering protocols: Contractors performing dewatering operations should assess whether they qualify for the proposed reduced turbidity-monitoring burden and document the basis for any such determination.

Subcontractor obligations: General contractors should review subcontract agreements to ensure that subcontractors performing earth-disturbing work are bound by SWPPP requirements, inspection protocols, and reporting obligations consistent with the proposed permit terms.

Liability allocation: Construction contracts should address liability for permit violations, including fines, corrective-action costs, and third-party claims arising from stormwater discharges. Indemnification provisions should be reviewed in light of the proposed permit's revised stabilization and reporting requirements.