diff --git a/docs/design/iter-slm254-lot3-01-not-authorized-20260725.json b/docs/design/iter-slm254-lot3-01-not-authorized-20260725.json
new file mode 100644
index 000000000..4198f31f2
--- /dev/null
+++ b/docs/design/iter-slm254-lot3-01-not-authorized-20260725.json
@@ -0,0 +1,26 @@
+{
+  "contract_hash": "99053bd6cd87993e05a2d3585b94b382a51e21183a25dad2b31d286da0cbea73",
+  "contract_id": "causal-latent-use-gate-v1",
+  "issue": {
+    "activation_requirement": "SLM-251 provides a qualified faithful latent checkpoint preserving strict outcomes versus the continued explicit control; SLM-252 selects the routing/timing/grounding contract (or explicitly authorizes a bounded causal study); SLM-253 selects the readout contract and target factors; and a gold/oracle trace substitution ceiling is nonzero.",
+    "alias": "LOT3-01",
+    "gate_contract_id": "causal-latent-use-gate-v1",
+    "linear_issue": "SLM-254",
+    "slug": "lot3-01-causal-latent-use",
+    "title": "Establish latent-factor availability, necessity, and specificity with causal interventions"
+  },
+  "lot1_01_disposition": "not_authorized",
+  "lot1_02_disposition": "not_authorized",
+  "schema_version": "lot_downstream_gate/v1",
+  "verdict": "not_authorized",
+  "verdict_rationale": "LOT3-01 (SLM-254) activation requires: SLM-251 provides a qualified faithful latent checkpoint preserving strict outcomes versus the continued explicit control; SLM-252 selects the routing/timing/grounding contract (or explicitly authorizes a bounded causal study); SLM-253 selects the readout contract and target factors; and a gold/oracle trace substitution ceiling is nonzero. The LOT1-02 launch gate reports 'not_authorized' (LOT1-01 disposition 'not_authorized'): no faithful K x c model path, curriculum, Stage 0 parent, or continued-explicit control exists, and SLM-249's oracle ceiling is not positive. Closing not_authorized in plan-only/bounded-diagnostic mode; no training, factorial, intervention, or systems code is added by this disposition.",
+  "version_stamp": {
+    "code_commit": "f0c05a941e8a5ddf3fa0c2ee8ad68069497d086f",
+    "code_dirty": true,
+    "components": {
+      "harness.experiments": "v113"
+    },
+    "stamp_schema": "version_stamp/v1",
+    "stamped_at": "2026-07-25T16:11:10.889626+00:00"
+  }
+}
diff --git a/docs/design/iter-slm254-lot3-01-not-authorized-20260725.md b/docs/design/iter-slm254-lot3-01-not-authorized-20260725.md
new file mode 100644
index 000000000..f7c51a323
--- /dev/null
+++ b/docs/design/iter-slm254-lot3-01-not-authorized-20260725.md
@@ -0,0 +1,15 @@
+# SLM-254 LOT3-01 — Downstream-gate disposition (causal-latent-use-gate-v1)
+
+Verdict: **not_authorized**
+
+LOT3-01 (SLM-254) activation requires: SLM-251 provides a qualified faithful latent checkpoint preserving strict outcomes versus the continued explicit control; SLM-252 selects the routing/timing/grounding contract (or explicitly authorizes a bounded causal study); SLM-253 selects the readout contract and target factors; and a gold/oracle trace substitution ceiling is nonzero. The LOT1-02 launch gate reports 'not_authorized' (LOT1-01 disposition 'not_authorized'): no faithful K x c model path, curriculum, Stage 0 parent, or continued-explicit control exists, and SLM-249's oracle ceiling is not positive. Closing not_authorized in plan-only/bounded-diagnostic mode; no training, factorial, intervention, or systems code is added by this disposition.
+
+## Upstream chain
+
+- LOT1-02 launch gate (SLM-251): `not_authorized`
+- LOT1-01 activation gate (SLM-250): `not_authorized`
+- Activation requirement: SLM-251 provides a qualified faithful latent checkpoint preserving strict outcomes versus the continued explicit control; SLM-252 selects the routing/timing/grounding contract (or explicitly authorizes a bounded causal study); SLM-253 selects the readout contract and target factors; and a gold/oracle trace substitution ceiling is nonzero.
+
+## Non-goals honored
+
+No training campaign, factorial, readout/decoder, intervention, systems measurement, or production default change. This disposition is itself the deliverable while the upstream activation gate is unmet.
diff --git a/src/slm_training/harnesses/experiments/lot_downstream_gate.py b/src/slm_training/harnesses/experiments/lot_downstream_gate.py
index 346a36f8f..af1d6b9a7 100644
--- a/src/slm_training/harnesses/experiments/lot_downstream_gate.py
+++ b/src/slm_training/harnesses/experiments/lot_downstream_gate.py
@@ -91,6 +91,21 @@ def to_dict(self) -> dict[str, Any]:
             "routing."
         ),
     ),
+    "SLM-254": DownstreamIssueSpec(
+        linear_issue="SLM-254",
+        alias="LOT3-01",
+        title="Establish latent-factor availability, necessity, and specificity with causal interventions",
+        gate_contract_id="causal-latent-use-gate-v1",
+        slug="lot3-01-causal-latent-use",
+        activation_requirement=(
+            "SLM-251 provides a qualified faithful latent checkpoint "
+            "preserving strict outcomes versus the continued explicit "
+            "control; SLM-252 selects the routing/timing/grounding contract "
+            "(or explicitly authorizes a bounded causal study); SLM-253 "
+            "selects the readout contract and target factors; and a "
+            "gold/oracle trace substitution ceiling is nonzero."
+        ),
+    ),
 }
 
 
diff --git a/src/slm_training/resources/versions.json b/src/slm_training/resources/versions.json
index 0c75d2dd9..1263c50e1 100644
--- a/src/slm_training/resources/versions.json
+++ b/src/slm_training/resources/versions.json
@@ -1912,7 +1912,7 @@
       ]
     },
     "harness.experiments": {
-      "version": "v119",
+      "version": "v120",
       "kind": "harness",
       "paths": [
         "scripts/run_slm298_capacity_context_curriculum.py",
@@ -1921,6 +1921,11 @@
         "tests/test_scripts/test_run_slm298_capacity_context_curriculum.py"
       ],
       "history": [
+        {
+          "version": "v120",
+          "date": "2026-07-25",
+          "note": "register SLM-254 LOT3-01 in the LOT downstream gate registry; closes not_authorized (causal study not authorized) off the unmet LOT1/LOT2 chain"
+        },
         {
           "version": "v119",
           "date": "2026-07-25",
@@ -1986,6 +1991,11 @@
           "date": "2026-07-25",
           "note": "add SLM-300 AP-015 self-context exposure-bias curriculum manifest, policy-origin-mixture wiring/fixture harness, and mixture-zero legacy-equivalence invariant"
         },
+        {
+          "version": "v113",
+          "date": "2026-07-25",
+          "note": "register SLM-254 LOT3-01 in the LOT downstream gate registry; closes not_authorized (causal study not authorized) off the unmet LOT1/LOT2 chain"
+        },
         {
           "version": "v112",
           "date": "2026-07-25",
@@ -9806,13 +9816,15 @@
       ]
     },
     "harness.experiments.lot_downstream_gate": {
-      "version": "v2",
+      "version": "v3",
       "kind": "gate",
       "paths": [
         "docs/design/iter-slm252-lot2-01-not-authorized-20260725.json",
         "docs/design/iter-slm252-lot2-01-not-authorized-20260725.md",
         "docs/design/iter-slm253-lot2-02-not-authorized-20260725.json",
         "docs/design/iter-slm253-lot2-02-not-authorized-20260725.md",
+        "docs/design/iter-slm254-lot3-01-not-authorized-20260725.json",
+        "docs/design/iter-slm254-lot3-01-not-authorized-20260725.md",
         "scripts/evaluate_lot_downstream_gate.py",
         "src/slm_training/harnesses/experiments/lot_downstream_gate.py",
         "tests/test_harnesses/experiments/test_lot_downstream_gate.py",
@@ -9820,9 +9832,14 @@
       ],
       "history": [
         {
-          "version": "v2",
+          "version": "v3",
           "date": "2026-07-25",
-          "note": "add SLM-253 LOT2-02 registry entry + not_authorized iter docs (structured-latent-readout-gate-v1)"
+          "note": "add SLM-254 LOT3-01 registry entry + not_authorized iter docs (causal-latent-use-gate-v1)"
+        },
+        {
+          "version": "v3",
+          "date": "2026-07-25",
+          "note": "add SLM-254 LOT3-01 registry entry + not_authorized iter docs (causal-latent-use-gate-v1)"
         },
         {
           "version": "v2",
diff --git a/tests/test_harnesses/experiments/test_lot_downstream_gate.py b/tests/test_harnesses/experiments/test_lot_downstream_gate.py
index 2ef843a97..2c41bd352 100644
--- a/tests/test_harnesses/experiments/test_lot_downstream_gate.py
+++ b/tests/test_harnesses/experiments/test_lot_downstream_gate.py
@@ -108,3 +108,16 @@ def test_slm253_real_contracts_are_not_authorized() -> None:
 
     assert contract.verdict == NOT_AUTHORIZED
     assert contract.contract_id == "structured-latent-readout-gate-v1"
+
+
+def test_slm254_real_contracts_are_not_authorized() -> None:
+    """LOT3-01's own text: if the gates fail, close with
+    causal_study_not_authorized rather than manufacturing interpretability
+    evidence. With the LOT1/LOT2 chain unmet there is no faithful latent
+    checkpoint to intervene on.
+    """
+    fidelity, trace = _real_contracts()
+    contract = evaluate_downstream_gate(DOWNSTREAM_ISSUES["SLM-254"], fidelity, trace)
+
+    assert contract.verdict == NOT_AUTHORIZED
+    assert contract.contract_id == "causal-latent-use-gate-v1"
diff --git a/tests/test_scripts/test_evaluate_lot_downstream_gate.py b/tests/test_scripts/test_evaluate_lot_downstream_gate.py
index b45d7cd30..8f5a63d03 100644
--- a/tests/test_scripts/test_evaluate_lot_downstream_gate.py
+++ b/tests/test_scripts/test_evaluate_lot_downstream_gate.py
@@ -46,3 +46,12 @@ def test_slm253_run_reports_not_authorized(tmp_path: Path) -> None:
     data = json.loads((out / "lot2_02_structured_readout_gate.json").read_text())
     assert data["verdict"] == "not_authorized"
     assert data["issue"]["alias"] == "LOT2-02"
+
+
+def test_slm254_run_reports_not_authorized(tmp_path: Path) -> None:
+    out = tmp_path / "gate254"
+    rc = evaluate_lot_downstream_gate.main(["--issue", "SLM-254", "--out", str(out)])
+    assert rc == 0
+    data = json.loads((out / "lot3_01_causal_latent_use_gate.json").read_text())
+    assert data["verdict"] == "not_authorized"
+    assert data["issue"]["alias"] == "LOT3-01"