WASHINGTON (LN) — A federal court on Saturday vacated an Internal Revenue Service notice that redefined the “beginning of construction” standard for wind and solar tax credits, ruling the agency’s action was arbitrary and capricious under the Administrative Procedure Act.
The court granted summary judgment for five of the seven plaintiffs, which included environmental groups, an energy developer, and a city government. It declared IRS Notice 2025-42 invalid and remanded the matter to the agency for further action.
The ruling preserves the availability of two significant tax credits for clean energy projects that must begin construction by July 4, 2026, or be placed in service by December 31, 2027. The dispute centered on what steps a taxpayer must take July deadline to qualify for the incentives.
The court dismissed two plaintiffs, Hopi Utilities Corporation and the Maryland Office of People’s Counsel,. It denied the IRS’s motion for summary judgment and granted in part the agency’s motion to dismiss.
The winning plaintiffs are Oregon Environmental Council, Natural Resources Defense Council, Public Citizen, Woven Energy LLC, and the City and County of San Francisco.
The court issued the order on June 6, 2026, noting the time sensitivity of the matter. The decision is final and appealable.