With the inauguration of President Donald Trump and the Republican Party taking control of both houses of Congress, the renewable energy industry is faced with great uncertainty, including the potential for immediate impacts on the regulatory environment based on recent executive action.
On January 20, 2025, President Trump issued a memorandum instructing federal agencies to freeze pending rulemaking activity and consider postponing the effective date of new or pending rules until a member of the Trump administration has reviewed such rules. The issuance of this memorandum was widely expected, and similar actions have been taken by incoming administrations going back to at least the George W. Bush administration. The memorandum defines “rules” broadly to not only include those issued through the Administrative Procedures Act, but also (1) “any substantive action by an agency (normally published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including notices of inquiry, advance notices of proposed rulemaking, and notices of proposed rulemaking” and (2) “any agency statement of general applicability and future effect that sets forth a policy on a statutory, regulatory, or technical issue or an interpretation of a statutory or regulatory issue.”
In particular, the memorandum instructs federal agencies to:
- Not propose or issue, or send for publication in the Federal Register, any rule until it has been reviewed and approved by a member of the Trump administration (subject to limited carveouts for emergencies, urgent circumstances, or statutory or judicial deadlines);
- Withdraw any rules that have been sent for publication in the Federal Register but have not been published (subject to the same limited carveouts described above); and
- Consider postponing for 60 days the effective date for any published rules or any other rule that has been issued in any manner but not yet taken effect.
In addition to the regulatory freeze described above, recently finalized rules can be made ineffective through a fast-tracked act of Congress under the Congressional Review Act. While since its enactment in 1996, the Congressional Review Act has rarely been used, it is notable that according to the Government Accountability Office, roughly 75% of regulations nullified under the Congressional Review Act were those finalized during the last months of the Obama administration and nullified in the first months of the first Trump administration. Although determining the lookback window for finalized rules that can be overturned requires a detailed review of the House and Senate calendars, the Congressional Research Service estimates the period likely began around August 1, 2024.
As described further below, some major regulations and guidance related to the Inflation Reduction Act may be subject to the regulatory freeze and/or the Congressional Review Act.
Perhaps pursuant to the regulatory freeze, the following items of sub-regulatory guidance have not yet been published in the Internal Revenue Bulletin, which could limit their precedential value.
- IRS Notice 2025-08 (regarding the first updated elective safe harbor for the domestic content bonus).
- Rev. Proc. 2025-14 (regarding greenhouse gas emission rates for 45Y and 48E credits).
While the plain text of the regulatory freeze memorandum arguably does not cover currently effective guidance, such as the above, some industry participants believe the freeze has blocked their publication, which may limit their precedential value. However, as of this post, we are still in the relatively normal delay period between the release of guidance and publication in the IRB. If the above is not published next week in the IRB, practitioners may need to consider the limited precedential value of unpublished sub-regulatory guidance. Interested parties should continue to monitor the IRB (posted online each Friday and printed the following week) to check if the above have been published.
The following published and effective final rules are subject to potential nullification pursuant to the Congressional Review Act:
- Election To Exclude Certain Unincorporated Organizations Owned by Applicable Entities From Application of the Rules on Partners and Partnerships (direct pay guidance), published in the Federal Register at Vol. 89, Page 91552, and effective on January 19, 2025.
- Section 45Y Clean Electricity Production Credit and Section 48E Clean Electricity Investment Credit, published in the Federal Register at Vol. 90, Page 4006, and effective on January 15, 2025.
- Guidance on Clean Electricity Low-Income Communities Bonus Credit Amount Program, published in the Federal Register at Vol. 90, Page 2482, and effective on January 13, 2025. Note that the additional guidance published in Rev. Proc. 2025-11 may also be subject to the Congressional Review Act. This area of the law is undeveloped.
- Credit for Production of Clean Hydrogen and Energy Credit, published in the Federal Register at Vol. 90, Page 2224, and effective on January 10, 2025.
- Advanced Manufacturing Production Credit, published in the Federal Register at Vol. 89, Page 85798, and effective on December 27, 2024.
- Definition of Energy Property and Rules Applicable to the Energy Credit, published in the Federal Register at Vol. 89, Page 100598, and effective on December 12, 2024.
In addition to the above, the change in administrations is likely to impact proposed rules, including the Section 45W Credit for Qualified Commercial Clean Vehicles rule, which remains open for comment through March 17, 2025.
Further, while this post only covers regulations related to the Inflation Reduction Act, readers should check the Federal Register for other rules that may have been delayed pursuant to the regulatory freeze (including some regulations issued by the EPA). Additionally, the Trump administration’s broad spending freeze, which has caused widespread confusion, has significant broader impacts. While the OMB memorandum announcing the spending freeze has been withdrawn, as of publication, there is continued confusion over current policy, as the White House announced that the withdrawal of the memo “is NOT a rescission of the federal funding freeze.” Of note, as of publication, Solar for All funding appears to be frozen.