A federal judge struck down an Internal Revenue Service rule that made it harder for wind and solar projects to qualify for federal tax credits, according to court documents, in a setback for the Trump administration’s efforts to curb renewable energy development.
In a ruling issued Saturday, Judge Colleen Kollar-Kotelly of the U.S. District Court for the District of Columbia said the IRS failed to adequately explain why it eliminated a long-standing standard used to determine when a clean energy project had begun construction. The decision sends the agency’s guidance back for further consideration.
Court Decision
The rule, issued last August, removed a provision that allowed many developers to qualify for tax credits by spending at least 5% of a project’s total cost before the credits expired. For more than a decade, developers had relied on that standard, known as the “Five Percent Safe Harbor.”
According to the court’s decision, the IRS change was a “significant change” from the agency’s long-standing practice. The judge also wrote that “the natural economic consequence of the Notice is less clean electricity generation capacity and higher electricity prices.”
