WASHINGTON (LN) — U.S. District Judge Colleen Kollar-Kotelly on June 6, 2026, vacated IRS Notice 2025-42, a directive that had imposed requirements for developers to “begin” construction on wind and solar projects to qualify for expiring clean energy tax credits.
The order, issued in Oregon Environmental Council v. Internal Revenue Service, grants summary judgment for plaintiffs Oregon Environmental Council, Natural Resources Defense Council, Public Citizen, Woven Energy LLC, and the City and County of San Francisco.
The dispute centered on the deadline for projects to secure tax credits under 26 U.S.C. §§ 45Y and 48E. Under current law, credits are available only for projects that begin construction on or before July 4, 2026, or are completed by Dec. 31, 2027.
The IRS had issued Notice 2025-42 to clarify what constitutes “beginning” construction, a determination critical for developers facing the imminent July 4 cutoff.
Kollar-Kotelly ruled the notice was arbitrary and capricious in violation of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A).
The court ordered the notice vacated and remanded to the IRS for further administrative action consistent with the order and accompanying memorandum opinion.
The court also dismissed plaintiffs Hopi Utilities Corporation and the Maryland Office of People’s Counsel from the action.
The defendants’ motion to dismiss was granted in part and denied in part, while their alternative motion for summary judgment was denied.
Kollar-Kotelly noted the time sensitivity of the matter, issuing the decision on June 6, 2026, rather than waiting for the next business day.
The order is final and appealable.