California – California Attorney General Rob Bonta is one of 17 attorneys general who are fighting a proposed federal tax policy that they say will limit the growth of sustainable energy and raise the cost of electricity.
The group submitted an amicus brief in the U.S. District Court for the District of Columbia against Internal Revenue Service Notice 2025-42, which makes it harder for some wind and solar projects to get federal tax credits.
The dispute is about how the federal government decides when work on a renewable energy project has officially started. For years, wind and solar developers could get tax credits if they met certain criteria, such as the “safe harbor” regulation, which stated that developers had to spend at least 5% of the total project expenditures by a certain date. The new IRS notice makes that threshold stricter, which makes it difficult for projects to meet it.
Bonta and the group say that the policy shift goes against the goal of government clean energy subsidies. They believe that the measure will cut down on the amount of renewable energy available at a time when the demand for electricity is growing across the country.
They further contend that the growth of data centers, cloud computing, and artificial intelligence has put more strain on the grid, making it necessary to generate more energy.
The Clean Electricity Production Tax Credit and the Clean Electricity Investment Tax Credit were created by the Inflation Reduction Act of 2022 to promote energy facilities that don’t pollute the air. By 2035, the incentives were expected to save customers between $16 billion and $34 billion a year on their electric bills. They would also lower air pollution by 20% and greenhouse gas emissions by hundreds of millions of tons.
Still, Congress enacted the One Big Beautiful Bill Act in July 2025. This law will end tax credits for some wind and solar plants that start operating after December 31, 2027. Projects that started building on or before July 4, 2026, were given a break. The coalition says that the IRS notice that came out the next month made eligibility even more limited by changing the definition of what counts as the start of construction, which means that projects that would have fulfilled the requirement before are now not eligible.
The brief says that the outcome could be projects that are never finished, jobs that are lost, and greater development expenses that would eventually be passed on to ratepayers. The attorneys general say that the notice is random and goes against the Administrative Procedure Act.
Bonta has recently taken further legal action against federal initiatives that harm clean energy. This includes suing over budget cuts and past efforts linked to wind development.
In this most recent complaint, he is joined by attorneys general from the District of Columbia, Oregon, Arizona, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, Minnesota, New Mexico, New Jersey, Rhode Island, Washington, and the District of Columbia.