WASHINGTON (LN) — U.S. District Judge Colleen Kollar-Kotelly on June 6, 2026, vacated Internal Revenue Service Notice 2025-42, which redefined the “beginning of construction” standard for wind and solar tax credits. The court ruled the notice was arbitrary and capricious in violation of the Administrative Procedure Act.
The order resolves a dispute over what taxpayers must do by July 4, 2026, to qualify for tax incentives that expire for new projects after that date.
The court granted summary judgment in favor of five of the seven plaintiffs: Oregon Environmental Council, Natural Resources Defense Council, Public Citizen, Woven Energy LLC, and the City and County of San Francisco.
The court dismissed two other plaintiffs, Hopi Utilities Corporation and Maryland Office of People’s Counsel, from the action.
The court denied the IRS’s motion for summary judgment and granted in part the agency’s motion to dismiss, which sought to remove the dismissed plaintiffs.
The ruling vacates IRS Notice 2025-42 in full and remands the matter to the agency for further administrative action consistent with the court’s opinion.
The notice at issue affected the availability of two significant tax credits for wind and solar energy projects under 26 U.S.C. §§ 45Y and 48E.
The court issued the decision on June 6, 2026, noting the time sensitivity of the matter rather than waiting until the next business day.
The order is final and appealable.