AG Nessel Supports Lawsuit Challenging IRS Rule That Threatens Wind and Solar Projects and Could Drive Up Energy Bills

LANSING – Michigan Attorney General Dana Nessel and a coalition of 13 other attorneys general supported a lawsuit challenging a new Internal Revenue Service (IRS) rule (PDF) that makes it harder for wind and solar energy projects to qualify for long-standing federal tax credits. The states argue the change will undermine investments in clean energy, slow economic growth, and increase costs for families and businesses. 

“At a time when everyday costs keep going up, the IRS and Trump administration should be doing everything they can to support clean, affordable energy that lowers expenses,” said Attorney General Nessel. “Instead, this new rule would drive up utility bills without even offering a clear justification for abandoning long-standing policy. I stand with my colleagues in urging the Court to reverse this rule to shield families from higher energy costs while protecting our environment.”

For years, energy developers could qualify for these tax credits by either starting significant physical construction or by investing at least five percent of a project’s total cost. The new IRS rule removes that five-percent option for most wind projects and larger solar facilities – while leaving other energy industries untouched.

The states argue the rule is unlawful, arbitrary, and harmful to consumers. At a time when electricity demand is rising rapidly due to data centers, artificial intelligence, advanced manufacturing, and population growth, limiting new energy projects risks tightening supply. When supply tightens while demand increases, prices go up – and families and businesses pay the price through higher utility bills.

Federal clean energy tax credits were created to encourage investment in new electricity generation and help lower long-term costs for consumers. Prior federal estimates projected that these credits would:

• Bring hundreds of gigawatts of new electricity generation online
• Reduce electric costs for consumers by billions of dollars annually
• Cut air pollution and greenhouse gas emissions

The states argue the agency failed to provide adequate justification for the change and did not properly consider the impact on state energy planning, consumer costs, and projects already underway.

The states are asking the Court to strike down the rule and restore the previous standards that had been in place for more than a decade. The federal clean energy tax credits are set to expire on July 4, 2026.

About the Lawsuit

The underlying lawsuit was filed in the U.S. District Court for the District of Columbia by a coalition of clean energy and consumer groups, including the Oregon Environmental Council, NRDC (Natural Resources Defense Council), Public Citizen, Hopi Utilities Corporation, Woven Energy, the City and County of San Francisco, and the Maryland Office of People’s Counsel.

Joining Attorney General Nessel in the amicus brief filed are the attorneys general of Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island, and Washington.

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