Environmental and renewable energy groups sue IRS, Treasury

A coalition of renewable energy stakeholders have sued the Internal Revenue Service and the Dept. of the Treasury for changes to tax credits that the group alleges are discriminating against solar and wind energy projects. The groups are led by the Oregon Environmental Council, and include the Natural Resources Defense Council (NRDC), Public Citizen, Hopi Utilities Corporation, Woven Energy, the city and county of San Francisco and the Maryland Office of People’s Counsel.

“The Trump administration has undertaken an illogical and illegal war on clean energy, and these arbitrary tax rules are just another salvo,” said Grace Henley, a tax attorney at NRDC, in a press release. “This is bad for clean energy, bad for workers and communities, bad for the air we all breathe, and horrible for Americans squeezed by higher utility bills.”

The lawsuit concerns an executive order issued by President Donald Trump following passage of the One Big Beautiful Bill Act (OBBBA) in July that removed a safe harbor clause specifically for solar and wind projects. Safe harbor lets projects eligible for tax credits still qualify for the subsidies if they complete an established percentage of the project before a deadline.

The coalition is claiming that the IRS’s removal of the 5% safe harbor for wind and solar projects 1.5 MW and larger was illegal. This removal of language could prevent solar projects from receiving the 30% federal investment tax credit before it expires on July 4, 2026.

“These new IRS rules have been a harsh blow. We have been counting on new solar projects to get electricity to those without it, help support essential services and to create and provide jobs,” said Tim Nuvangyaoma, former chairman of the Hopi Tribe. “The guidance has forced us to change our plans, and the Hopi Utilities Corporation is now racing to qualify for tax credits under the new guidelines. Getting the court to rectify this unjust action would give us the certainty we need.”