A federal judge has blocked a Trump administration rule that tightened access to federal tax credits for wind and solar projects, dealing another legal setback to efforts to restrict clean energy development. The Internal Revenue Service failed to adequately justify eliminating a four-year "safe harbour" pathway that had allowed developers to maintain eligibility by spending just 5% of project costs, the court found.
A US federal judge has overturned a Trump administration policy that had tightened requirements for renewable energy developers to claim federal tax incentives.
US District Judge Colleen Kollar-Kotelly ruled on Saturday, 6 June 2026, that the Treasury Department’s Internal Revenue Service (IRS)Â failed to justify eliminating a long-established standard for what qualifies as active construction.
At issue was the IRS decision last August to remove a pathway allowing developers to “safe harbour” wind and solar projects for four years by spending 5% of total project costs—a practice that had been in place for a decade.
The agency retained this option only for the smallest installations. Judge Kollar-Kotelly determined the agency had not provided adequate reasoning and sent the rules back for reconsideration.
Tighter timelines and higher stakes
Clean energy projects must start construction by 4 July 2026 or be operational by 31 December 2027 to access a 30% federal tax credit and potential additional bonuses. The removal of the 5% cost threshold significantly narrowed how developers could maintain eligibility for these incentives during the lengthy construction phase.
Environmental and city groups win legal challenge
The lawsuit was brought by the Oregon Environmental Council, the Natural Resources Defence Council, Public Citizen, San Francisco, and Woven Energy. They contended the change would raise electricity costs and slow clean energy development. San Francisco City Attorney David Chiu said the ruling represents a critical limit on administration policies that drive up energy prices for residents nationwide.
Earlier in July 2025, President Donald Trump issued an executive order instructing the Interior Department to reassess policies seen as favouring renewable energy over other sources. The order also directs the Treasury Department to implement the rollback of wind and solar tax credits in line with the One Big Beautiful Bill Act passed on 7 July 2025.
