Michigan Attorney General Dana Nessel, together with attorneys general from 13 other states, has voiced support for a lawsuit challenging a recent Internal Revenue Service (IRS) rule. The new regulation changes the eligibility criteria for federal tax credits that have long supported wind and solar energy projects. According to the coalition, this change could hinder clean energy investments, slow economic growth, and increase costs for households 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.”
Historically, developers of renewable energy projects could qualify for tax credits by either beginning significant construction or investing at least five percent of a project’s total cost. The updated IRS rule removes the five-percent investment option for most wind projects and larger solar facilities but keeps it available for other types of energy industries.
The coalition argues that the revised rule is unlawful and arbitrary. They note that electricity demand is increasing due to factors such as data centers, artificial intelligence development, advanced manufacturing, and population growth. Limiting new renewable energy projects may tighten supply just as demand rises, potentially leading to higher prices for consumers.
Federal tax credits were designed to encourage investment in electricity generation while reducing long-term consumer costs. Previous federal estimates suggested these credits would bring hundreds of gigawatts of new power online, reduce electric costs by billions annually, and lower air pollution along with greenhouse gas emissions.
The attorneys general contend that the IRS did not provide sufficient justification for its decision nor adequately consider impacts on state-level planning or existing projects.
The group is asking the court to overturn the rule and restore previous standards that had been in place for over ten years. These federal clean energy tax credits are scheduled to expire on July 4, 2026.
The underlying lawsuit was filed in U.S. District Court in Washington D.C., led by organizations including the Oregon Environmental Council, Natural Resources Defense Council (NRDC), Public Citizen, Hopi Utilities Corporation, Woven Energy, San Francisco city officials, and Maryland’s Office of People’s Counsel.
Alongside Nessel are attorneys general from Arizona, California, Colorado, Connecticut, Delaware, Illinois, Maine, Minnesota, New Jersey, New Mexico, Oregon, Rhode Island and Washington.
Dana Nessel currently serves as Michigan’s 54th attorney general according to information from the official website. The Michigan Department of Attorney General holds statewide authority aimed at protecting residents through various initiatives including social efforts against human trafficking and policies like drafting expungement opportunities under laws such as Clean Slate enacted in 2019 (source). The department focuses on serving Michigan residents through public service initiatives (source).
