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Oregon AG Coalition Challenges IRS Rule on Clean Energy Tax Credits

Internal Revenue ServiceFebruary 20, 2026Oregon Attorney General

Summary

Environmental and consumer protection enforcement action. Oregon Attorney General Dan Rayfield led a coalition of 16 states in filing an amicus brief supporting a lawsuit against the IRS. The challenge contests a new IRS rule that removes a key pathway (5% investment test) for wind and solar projects to qualify for federal clean energy tax credits. The states argue the rule is unlawful, arbitrary, will increase energy costs for families and businesses, and undermine state clean energy goals and investments.

Remedy

The states are asking the U.S. District Court for the District of Columbia to strike down the new IRS rule and restore the previous, decade-old standards that allowed projects to qualify for tax credits by either starting construction or investing at least 5% of project costs.

Injunction

Contract Impact

In-house legal teams should review vendor, customer, and partnership agreements in the energy and project development sectors where federal clean energy tax credits are a material economic component. Focus on clauses addressing representations and warranties regarding tax credit eligibility, compliance with evolving regulatory requirements, force majeure or changed law provisions, and conditions precedent tied to qualification for tax incentives. Given the IRS rule eliminating the 5% investment test for wind and larger solar projects, contracts may require amendments to reflect new eligibility pathways, renegotiation of economic terms dependent on this pathway, or inclusion of mechanisms to address future regulatory shifts that could impact project viability and return on investment.

Contract Search Terms

tax credit eligibility criteria5% investment testclean energy project qualificationsregulatory compliance clausetax incentive representationsforce majeure for regulatory changesenergy development contractsfederal tax credit provisionsIRS rule changesinvestment threshold requirements

Violation Types

Entity Details

Entity

Internal Revenue Service

Also known as: IRS

Industry

Other

Multistate Coalition

ArizonaCaliforniaColoradoConnecticutDelawareIllinoisMaineMarylandMassachusettsMichiganMinnesotaNew MexicoNew JerseyRhode IslandWashington

Official Sources

Source Evidence

Entity Name
"challenging a new Internal Revenue Service (IRS) rule"
Jurisdiction
"Attorney General Dan Rayfield led a coalition of 15 other states today in supporting a lawsuit"
Summary
"The states argue the rule is unlawful, arbitrary, and harmful to consumers."
Remedy Types
"The states are asking the court to strike down the rule and restore the previous standards"

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