Salem, Oregon – A coalition of 16 states, led by Oregon Attorney General Dan Rayfield, is backing a legal challenge to a new Internal Revenue Service rule that could make it more difficult for certain wind and solar energy projects to qualify for federal tax credits.
Rayfield announced that Oregon is leading an amicus brief supporting a lawsuit filed in the U.S. District Court for the District of Columbia. The case contests an IRS change that removes a long-standing pathway allowing energy developers to qualify for tax credits by investing at least five percent of a project’s total cost. That option would no longer apply to most wind projects and larger solar facilities, while other energy industries remain unaffected.
For years, developers could secure eligibility for federal clean energy tax credits either by beginning significant physical construction or by meeting the five-percent investment threshold. The coalition argues that eliminating the investment option for certain renewable projects will discourage development at a time when electricity demand is rapidly increasing.
“Oregonians are already paying a lot for electricity,” said Attorney General Rayfield.
“This just makes it harder to build clean affordable energy. We are using all the tools we have to protect consumers and keep energy bills from climbing even higher.”
The states contend the rule is unlawful and arbitrary. They argue that limiting new renewable energy projects could tighten electricity supply just as demand grows due to data centers, artificial intelligence, advanced manufacturing, and population growth. When supply shrinks and demand rises, prices tend to follow.
Federal clean energy tax credits were designed to encourage new power generation, lower consumer costs, and reduce pollution. Prior federal estimates projected the credits would add hundreds of gigawatts of electricity generation, cut consumer costs by billions annually, and reduce greenhouse gas emissions.
The underlying lawsuit was filed by clean energy and consumer advocacy groups, including the Oregon Environmental Council, NRDC, Public Citizen, Hopi Utilities Corporation, Woven Energy, the City and County of San Francisco, and the Maryland Office of People’s Counsel.
Attorneys general from Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Mexico, New Jersey, Rhode Island, and Washington joined Oregon in the filing. The states are asking the court to strike down the rule and reinstate standards that have been in place for more than a decade. Federal clean energy tax credits are scheduled to expire on July 4, 2026.
